Franchisees Must Put Up Or Shut Up

The Australian:

THE federal Government has ignored the Franchise Council of Australia and bowed to public pressure to review key sections of the franchise industry’s governing code of conduct.

This is the time for those franchisees with complaints to put up or shut up.

The federal Government’s decision to review the disclosures section of the Franchising Code of Conduct is timely, if not overdue. And it could be better if it had a wider focus.

“Over the past few months, a number of concerns have been raised regarding the adequacy of the disclosures section of the Franchising Code,” Minister for Small Business and Tourism Fran Bailey says.

“Most people in the franchising sector do the right thing, but given the level of concern, I have decided to review the disclosures section of the Code.”

The focus will be the disclosures section, which specifies the vital information franchisors must reveal to potential franchisees before selling a franchise.

The mandatory code was introduced in 1998 and brought with it a mediation service to help resolve disputes.

The Minister was at pains to praise the industry, but was realistic about its problems.

“Overall, franchising is growing rapidly and an undoubted small business success story,” Bailey says. “Today, franchising is an $80 billion industry that employs more than 600,000 Australians. As Minister, my goal is to make franchising even stronger tomorrow than it is today.”

After years of complaints from franchisees that the Australian Competition and Consumer Commission appeared powerless to help franchisees, and a number of failed attempts to launch franchisees associations, a recent CPA Australia report underlined specific problems with franchising.

Franchisees had little protection under insolvency laws when their franchisor collapsed, the study found.