Business Advice

Budget to include $100 million manufacturing fund … Domino’s first to get hit for Franchising Code breaches … E-Cigarette companies face $175,000 in fines

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By Emma Koehn and Dominic Powell 

Manufacturing businesses are set to benefit from the upcoming federal budget, with the ABC reporting a $100 million fund for manufacturers will be unveiled tomorrow.

Industry Minister Arthur Sinodinos told the ABC the fund will be directed to businesses traditionally in the auto sector, which are now looking to “diversify” after multiple automotive companies have left the country.

Businesses in South Australia and Victoria are expected to be allocated $10 million of the funding, with a further $47.5 million going to an advanced manufacturing growth fund, and $24 million heading towards research projects.

“Australia has got a great future in advanced manufacturing, including in the auto sector. We love our cars and we love looking after our cars and there is a lot we can do in the future to build on the expertise we have got here,” Sinodinos told the ABC.

South Australian Senator Nick Xenophon said the news was “unambiguously good” for the state.

“Finally we’re seeing some funds released that will allow small and medium-businesses in the automotive sector to be able to transition once Holden closes in October,” he told the ABC.

“It will mean these businesses are able to turbo-charge diversification plans.”

Domino’s first to pay under new Franchising Code

The Australian Competition and Consumer Commission has issued the first infringement notices for alleged breaches of Australia’s revised Franchising Code, hitting pizza giant Domino’s Pizza Enterprises with $18,000 in fines.

The ACCC issued the notices because it believes the fast food company failed to provide franchisees with a financial statement for the company’s marketing fund and an auditor’s report within the required time frames under the new code. However, payment of an infringement notice by a company is not necessarily an admission that the code has been breached.

The new requirements compel a company’s head office to supply annual financial statements to franchisees of any marketing funds they are required to contribute to, and to do this within four months of the end of the financial year. Audit reports of these funds must also be completed and passed on to franchisees within 30 days of a review.

ACCC Deputy Chair Dr Michael Schaper said marketing funds are a major expense for franchisees, and the activities of these funds need to be explained in a timely manner.

“Ensuring small businesses receive the protection of industry codes is an enforcement priority for the ACCC,” he said in a statement this morning.

A spokesperson for Domino’s told SmartCompany this morning the reports were not provided to franchisees due to an “oversight”.

“Domino’s AdFund was independently audited in 2016, which confirmed all expenditure was appropriate and meeting the requirements of the Franchising Code of Conduct,” the spokesperson says.

“However we accept we did not provide a copy of this audit report on time to our franchisees, or the required financial statements in previous years — this was an oversight. Domino’s apologises to our franchisees for this honest mistake, and will ensure an annual audit report and financial statement are distributed to franchisees as required by the Code each year going forward.”

SMEs beat corporate peers in online sales

Australians are estimated to have spent $22.23 billion shopping online over the past year, but new online sales figures from the National Australia Bank indicates growth overall might be slowing.

While sales accelerated in March by 0.8% overall, the trend estimate of 0.2% growth is half as much as it was in the first months of the year, NAB analysts say. One bright spot is small and medium businesses competing in the online space, with these businesses growing faster than their corporate peers.

Online retail sales from SMEs grew 4.1% in March 2017, while the corporate sector saw 0.8% growth. Over the past year small businesses have also crushed bigger competitors on sales growth: compared with 12 months ago, sales for SMEs are up 23%, while bigger corporates have secured 9% growth for the year.

Takeaway food and media have experienced some of the biggest bumps in online growth over the past year, according to a report by NAB chief economist Alan Oster.

ACCC secures landmark penalties against e-cigarette companies

Australia’s consumer watchdog is claiming to be the first regulator to successfully take e-cigarette businesses to court over false and misleading statements, revealing this morning it has secured a combined $140,000 in pecuniary penalties against brands Social-Lites, Joystick and Elusion for contravening Australian Consumer Law.

The commission says it successfully argued the companies made misleading representations that their products did not contain harmful carcinogens, when this was not the case. The Federal Court also ordered the directors of Social-Lites and Joystick to pay $10,000 each, while Elusion’s director was ordered to pay $15,000.

ACCC acting chair Delia Rickard said customers had been incorrectly led to believe by the companies’ messaging “they would not be exposed to the harmful chemicals found in ordinary cigarettes”.

SmartCompany has contacted Social-Lites for comment but was unable to contact Joystick. Elusion is in liquidation, according to the ACCC.

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