When a product on the market poses a risk to consumers, swift and decisive action is critical—not just to comply with the law, but to protect your customers, your brand, and your business. Under the Australian Consumer Law (ACL), there are clear rules around when and how a product recall must be carried out. For businesses that sell physical products—especially franchised networks—understanding these rules is essential.
Compulsory vs Voluntary Recalls
The ACL allows for two types of recalls: compulsory recalls and voluntary recalls.
A compulsory recall is ordered by the responsible Minister and will be published online. It can be triggered where goods will or may cause injury (including through foreseeable misuse), do not comply with a safety standard, or are subject to a ban, and suppliers have not taken satisfactory steps to prevent harm. The recall notice will set out exactly what action must be taken—such as stopping sales, informing the public, offering repairs, replacements, or refunds, and ensuring any replacement goods comply with the relevant safety standards.
A voluntary recall is initiated by the supplier themselves, often before the regulator steps in. The law requires a supplier to voluntarily recall goods where they become aware the goods will or may cause injury, do not or are likely not to meet a safety standard, or are banned. This means that in obvious risk scenarios—say, a jar shattering on the production line and shards potentially being in shipped stock—a voluntary recall should be undertaken without delay to avoid injury to consumers.
Seller Obligations in a Recall
Once a recall—compulsory or voluntary—is underway, the seller must act quickly and follow specific procedures.
In a voluntary recall, the seller must notify the Commonwealth Minister within two days of starting the recall, providing detailed information about the defect or danger, any foreseeable dangerous use, non-compliance with safety standards, or ban status. If the product has been supplied overseas, the seller must also notify those customers as soon as possible and send a copy of that notice to the Minister within 10 days.
In a compulsory recall, the seller must comply with the instructions in the recall notice. These may include public announcements, safe disposal instructions, repairs, replacements, or refunds (at the seller’s cost, including transport). In both cases, continuing to supply recalled goods is prohibited and can attract significant penalties. Importantly, suppliers can also face claims for injuries caused by recalled goods if they fail to act or communicate effectively.
What Franchisors Should Note
For franchisors, the stakes in a recall are amplified because a product issue can impact the entire network. A defective or unsafe product sold across multiple franchise locations can quickly become a network-wide recall situation. This not only increases logistical complexity, but also magnifies reputational risk—if even one franchisee fails to follow the recall process, consumers may still be harmed and the brand could face regulator scrutiny.
Franchisors or their associates are often the legal “supplier” to their network, meaning they may be directly responsible for giving recall notifications under the ACL. Even where an external supplier is used, franchisors cannot take a hands-off approach—swift communication, coordinated instructions, and a clear action plan are essential to ensure every franchisee stops sales, isolates affected stock, and follows the correct customer and regulator notification processes. In some industries, franchisors may also wish to pre-agree with suppliers on who will bear the cost of a network-wide recall.
Training Franchisees on Recall Laws
Franchisees are often the public face of the brand, and in many cases they will be the first to spot a problem—such as customer complaints, product breakages, or safety incidents. For this reason, franchisees should receive training on:
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What a product recall is and when it might be necessary – including clear examples relevant to the business’s products.
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The signs that may trigger a recall – for example, injury reports, multiple customer complaints about the same issue, visible manufacturing defects, or issues flagged by a supplier.
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Immediate steps to take if a risk is identified – such as stopping sales, isolating affected stock, and contacting the franchisor.
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Their role in the recall process – including handling customer enquiries, processing refunds, and following product disposal instructions.
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Communication protocols – ensuring only approved messages are given to customers and the media to avoid inconsistent or misleading statements.
Training should be backed by accessible written guidelines so franchisees have a clear point of reference in an urgent situation. Scenario-based exercises can also be useful to test the speed and effectiveness of recall procedures.
When Franchisees Should Take Action
If a franchisee becomes aware of a potential product safety issue, they should not wait for head office to formally announce a recall before acting to protect customers. They should immediately stop selling the product, quarantine stock, and escalate the issue through the franchisor’s reporting channels. Where the issue is clear and urgent—such as discovering a safety hazard like broken glass, faulty electrical components, or contamination—a recall will likely be necessary, and prompt action will reduce the risk of harm and legal exposure.
Final Word
Product recalls are not just about compliance—they’re about customer safety and brand protection. For franchisors, having a network-wide recall plan, ensuring franchisees understand their obligations, and acting quickly when risks are identified will make the difference between a controlled, efficient recall and a damaging public safety incident. Under the ACL, timeframes are short, obligations are strict, and penalties are significant, so preparedness is key.