Franchise Code to Change Again

It appears that the franchise sector is in for another round of greater regulation. In December 2008, the Federal Parliamentary Joint Committee on Corporations and Financial Services (the committee) made 11 recommendations regarding the operation of Australia’s franchise sector and it’s Franchising Code of Conduct (the code). I can live with the vast majority of the proposed regulation changes and so will our clients if they become law later in the year.

It is the attitude of the Chairman of the committee which has smoke coming out of my ears. In publishing the recommendations the chairman of the committee, Mr Bernie Ripoll, is quoted as saying that 90% of problems that form the basis of a franchise dispute are the fault of the franchisor.

While the work done by the committee is valuable and it does only reflect a modest sample of the franchise industry. It is not a scientifically based survey when the committee calls for submissions and does no independent scientific research of its own. Naturally those with an axe to grind from either side of the argument make submissions to Government enquiries, along with industry bodies, big legal firms and the like. Based on what the committee heard the conclusion may have some validity, but based on a decade of independent University research the dispute rate remains consistently low at around 2%.

Our industry which has grown over the last 10 plus years through good times and bad in the economy at rates that make most of the rest of the economy look relatively poor. It has placed tens of thousands of Australian in their own successful business, employing hundreds of thousands of their fellow Australians. I accept the industry still has a few franchisors who appear to be in the industry for short term gains, not long terms growth with their franchise owners.

All I ask is for a little balance in the public reports on the franchise sector. The positives outweigh the negatives by a very long way.

By Grant Garraway CEO

Copyright 2014. My Tax Zone.