Government promises not to dabble in franchise reform until 2013

The Government will not introduce any more franchising reform until 2013, small business minister Nick Sherry said at the Franchise Council of Australia national convention yesterday.

But the announcement has brought scorn from University of New South Wales associate professor Frank Zumbo, who says the Government must act quickly to deal with rogue franchises and introduce good faith agreements.

“Those comments are extremely disappointing. It’s sad the Government continues to operate with its head in the sand in regard to the franchising sector. The problems are very real and rogue franchisors are giving the sector a bad name.”

“The continued failure of the Federal Government to deal with rogue franchisors is unfortunate, and is giving the industry an ongoing heartache.”

Zumbo says the Government is creating a policy vacuum that the states will be forced to fill – as evidenced by South Australia’s recent move to introduce food faith agreements into law. But Sherry said yesterday the Government won’t be looking at any reforms until at least 2013.

“There’s been a reform process that has delivered nationally consistent regulatory oversight of the sector (and) in a seamless national economy it’s important to have consistent regulation, particularly in economic and financial areas.”

“I don’t believe it’s helpful for any state government to try to cut across those changes by adding new regulations that will only apply to South Australia but will apply to businesses operating across state borders.”

Zumbo says the Federal Government would do well to emulate the South Australia reforms, particularly in the case of good faith agreements. The new SA legislation will also introduce a business commissioner to help settle disputes.

“What many franchisees wouldlike to see done, and what I would like to see done, is have financial penalties imposed in relation to breaches of the code, and also, the introduction of good faith agreements.”

“These have been supported by the South Australian government, and the federal inquiry, and these developments have received bi-partisan support. There is ample evidence to suggest these reforms are needed.”

South Australian MP Tony Piccolo introduced the franchising reform to SA, saying the state needs to pick up the slack left by the Federal Government.

But Sherry is adamant on the Government leaving reform alone saying yesterday that it, “doesn’t intend to revisit recent regulatory change before 2013… It’s a time for stability and looking at how the new code requirements operate.”

Elsewhere at the event, mining mogul Clive Palmer spoke to the 500 delegates attending regarding future growth of China and opportunities in Southeast Asia. Other events were held discussing how franchises can improve their business in relation to leases, information technology and expansion.

Franchise Council of Australia president Steve Wright was contacted for comment, but no reply was received before publication.