Budget 2021: New franchise disclosure registry to be established as Ombudsman’s office gets more funding

The federal government appears to be listening to ongoing concerns in the franchise sector, using the budget to announce plans for a new mandatory franchise disclosure registry to help prospective franchisees access the information they need before signing up to a new franchise agreement.

The new registry comes amid a broader focus on dispute resolution for small and medium businesses in the 2021 federal budget, with the office of the Australian Small Business and Family Enterprise Ombudsman to also receive a funding boost.

The mandatory franchise disclosure registry will receive funding of $4.3 million over a four-year period, starting in 2021-22.

According to the budget papers, the registry will “enable prospective franchisees to make an informed decision before entering a franchise agreement”.

In an media statement accompanying the papers, Small Business Minister Stuart Robert said the measure recognises the large number of Australian SMEs that operate franchises.

The registry will “increase transparency and restore confidence” in the franchising sector, he said.

While full details of how the registry will work are not yet available, its announcement follows a warning from Australian Competition and Consumer Commission deputy Mike Keogh this month for more prospective franchisees to “do their homework” before buying a franchise.

Dispute resolution

This year’s budget includes a number of measures designed to help improve access to dispute resolution services for SMEs.

This includes an additional $1.5 million in funding for the office of the Australian Small Business and Family Enterprise Ombudsman to “help small businesses identify and access support for dispute resolutions”.

In a pre-budget announcement, the government also said it will allow businesses engaged in debt disputes in the Administrative Appeals Tribunal (AAT) to apply to pause or modify debt recovery actions by the Australian Tax Office, if those actions are linked to the dispute before the AAT.

The measure, which will allow small businesses to avoid expensive and lengthy court proceedings to pause or modify ATO debt recovery actions, will be available to businesses with aggregated turnover of less than $10 million per year.

According to the budget papers, it will cause a “small but unquantifiable” decrease in government receipts over the forward estimates.

Small Business Ombudsman Bruce Billson welcomed the announcement on Tuesday morning, telling SmartCompany it is a “really positive step” that recognises that “small businesses deserve a fairer go” when involved in a dispute with the ATO.

In his budget speech, the Treasurer will say the change will help remove small business disputes from the court system and “let small business get on with what they do best”.

Small businesses are “at the heart of every local community” and “we need the tax system to work for them, not against them”, the Treasurer will say.