Regulatory burden increases for Australian franchisors; but Regtech may hold the answer

Recent amendments to the Australian Fair Work Act 2009 now make franchisors responsible for the underpayment of wages by their franchisees.

Included in the amendments are new higher penalties for serious contraventions of the Act, with an increase in penalties of up to 10 times higher.

For example, penalties for companies will rise from $54,000 to $540,000 per offence and for individuals from $10,800 to $100,800.

The bottom-line for franchisors is they are now going to have pay more attention to what their franchisees are doing; particularly if they exert a significant degree of influence or control over their operations.

There are a several options available to franchisors to improve their compliance oversight; the most popular and effective is regular audits.

But running a large-scale auditing programme can be very expensive with plenty of unforeseen traps for the uninitiated.

For example, while auditing companies might like Franchisors to believe they have to inspect every employee wage record to ensure they aren’t being exposed to systemic wage fraud, this couldn’t be further from the truth.

Recent innovations in Regtech, and Computer Aided Audit Technologies (CAAT) to be more precise, are now making it possible for franchisors to achieve similar levels of compliance assurance to 100% inspection by inspecting a smaller statistically calculated sample.

Furthermore, some of the smarter risk-based CAAT systems are able to automatically adjust the sample-size needed for each audit based on the franchisee’s previous compliance track record.

In other words, franchisees with a poor compliance track-record are automatically audited more intensely than those with a good track-record.

This dynamic, risk-based approach to auditing is significantly more efficient and effective than conventional static auditing solutions.

It also promises to significantly reduce the regulatory burden placed on franchisors brought about by these most recent legislative changes.

The amended Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 passed both houses on the 5th September ’17, and now only requires royal assent.

For more information on how your franchise can take advantage of this new generation in smart, risk-based Computer Aided Auditing Technology (CAAT) visit us at

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