Your franchisees make their own contractor engagement decisions, but inconsistent practices across a network can create reputational, commercial and, in some circumstances, legal exposure for the franchisor. ContractRight gives you a consistent, network-wide framework so compliance isn’t dependent on what each franchisee happens to know or do. We can also conduct a sample audit of selected franchisees’ existing contractor and contingent worker arrangements, giving you visibility of potential gaps before they become a network-wide problem.
The Fair Work Act's “responsible franchisor entity” provisions mean that if you exercise significant influence or control over your franchisees' affairs — which most franchise agreements do — you can be held accountable for their contractor or employee compliance failures.
A franchisee engages workers as ABN contractors when the relationship is actually employment, underpaying entitlements, super, and leave.
If you knew, or could reasonably be expected to have known, that contraventions were occurring or likely, you’re exposed. The court applies a reverse onus of proof.
Unless you can prove you took active, documented steps to prevent non-compliance across your network, the defence won’t hold up. Passive oversight isn’t enough.
A standardised, compliant contractor or contingent worker framework deployed across your franchise network addresses sham contracting risk at every level, protecting franchisees and franchisors alike, without slowing down how franchisees actually operate day to day.
These aren’t hypotheticals, the courts have already penalised franchisors, and the regulations are getting stricter.
The first time the Fair Work Ombudsman used the “responsible franchisor entity” provisions. 85 Degrees was penalised for its franchisees' underpayments — the franchisor didn't underpay anyone directly, but failed to take reasonable steps to ensure network wide compliance.
The Full Federal Court unanimously ruled that the burden of proof shifts to the franchisor when a franchisee fails to keep proper records. Bakers Delight was pursued for $642,000 of a $1.25 million underpayment — even though the franchisee was in liquidation.
If you’re a franchisor with contractors or with casual employees anywhere in your network, this is a current risk, not a future one.
We have conducted an extensive risk analysis from the franchisor perspective, the report is available without cost or obligation. It covers the key risk areas where failure to monitor downstream contracting and employment practices creates upstream risk.
Give franchisees a practical, consistent framework while giving the franchisor better visibility of downstream contractor and contingent worker risk.