Disgruntled franchisees consider launching new association

Disgruntled franchisees are planning to establish another franchisee association, with the support of a Liberal MP, complaining of poor treatment by franchisors and a lack of representation from the Franchise Council of Australia.

Joanna Gash, a long-time agitator for franchisee rights and Liberal member for the Federal seat of Gilmore in New South Wales, told SmartCompany the FCA – which represents both franchisors and franchisees – has failed to address the power imbalance between the two.

Gash says while the issue is to some extent a bipartisan issue, she’d like the Gillard Government to set up a small business and family enterprises ombudsman, and require franchisors to negotiate in good faith.

She is also keeping an eye on developments in Western Australia and South Australia, where there are moves to make the franchising code of conduct a state law, and therefore place penalties on some breaches. Gash believes the ACCC, which oversees the code of conduct, is a “toothless tiger”.

One franchisee involved in discussions to create the new group, who declined to be named because of a non-disparagement clause in their contract, says franchising has not delivered on its promises, and franchises do not see the FCA as acting in their interests.

“The thing about being your own boss and owning your own business just isn’t true,” the franchisee says.

“Yes, you do your own diligence, but in your franchise agreement you’re not allowed to disparage the brand in any way, shape or form, so if anybody says they’re looking to buy a franchise, you don’t know if they’re genuine, so you tell them, it’s good.

“A lot of franchisees stick to the middle ground and say they’re okay. In the last 12 months, people aren’t saying that.”

The FCA was not available for comment prior to publication.