By Aimee Chanthadavong

The Franchise Council of Australia (FCA) is urging on the Western and South Australian Parliament to abandon its state-based franchising legislation that would duplicate national regulation.

The FCA has recently put in its submission, on behalf of the industry, to the WA Parliamentary inquiry into the Private Member’s Bill raised in WA by backbencher Peter Abetz in October last year.

Abetz believed a state-based legislation was needed to provide small business franchisees greater protection from rogue franchisors by addressing the imbalance in the relationship between franchisees and franchisors.

A similar situation is also being led in South Australia by backbencher Tony Piccolo since 2009.

FCA executive director, Steve Wright, told Retailbiz that the laws are unnecessary as the regulation of the franchise industry is already covered by a National Code of Conduct, which was reformed six months ago, the Trade Practices Act and the Australian Competition and Consumer Commission.

“We believe it is premature to act before we have had a chance to see the positive effects of the new changes; some of which came in only a month ago.  Especially as the changes introduced directly address recommendations from WA, SA and Federal inquiries,” he said.

“However, we do not believe any time is a good time for state-based laws.  If the new laws are proved to be ineffective, then changes should be contemplated to the national regime.  There is nothing inadequate about the national regime – it is one of the most comprehensive in the world.  But if it’s determined that more changes are needed, then it should be done within the national framework – not through state jurisdictions.

“States currently regulate retail leasing – as a result, we have seven different retail codes; a major compliance headache for national operators.  Why impose the same inefficiency on the franchising sector?”

Wright also said he is puzzled by the MPs’ reasoning behind the actions.

“Each of the initiatives in each state is private member’s bills, which means it’s not initiated by the government.  But NSW academic, associate professor Frank Zumbo claims to have authored both bills raised by Tony Piccolo and Peter Abetz. Professor Zumbo, Mr Abetz and Mr Piccolo have all acknowledged ‘consulting’ with a huge franchising firm, called Competitive Foods (owner of Hungry Jacks and 50 KFC stores in WA).  However, none of the three men, to my knowledge, consulted with any other franchise brand owners in WA or SA in the development of their private member’s bills.”

Also, research undertaken by the FCA indicates that 95 per cent of member respondents do not support the state-based legislations.

“Both franchisors and franchisees are telling us they don’t need or want this legislation. With increased compliance costs, a disincentive to investment in WA and duplication of the national regime, this approach is all risk with no benefit,” Wright said.

The FCA currently is using all possible methods to prevent the introduction of the laws.

“We are trying to meet with as many MPs as possible to better educate them on the economic positives of franchising and the reality of the low level of disputes by international comparisons; putting submissions to government; doing member surveys, which we have presented to both WA and SA governments; and encouraging other interested stakeholders to voice their views.”