Franchise Council slams WA Franchising Bill

The Franchise Council of Australia has continued its attack on a Western Australian MP’s proposal to introduce state-based franchising legislation, saying the franchise sector doesn’t need or want the new laws.

In October last year, WA Liberal MP Peter Abetz put the bill before Parliament in October, calling for state-based legislation to protect WA franchisees from “rogue” franchisors.

The proposal was heavily criticised by the FCA, which argued state-based legislation would duplicate national regulation and cripple the WA franchising industry.

WA Premier Colin Barnett eventually sent the bill to a Parliamentary inquiry for further examination.

FCA executive director Steve Wright is currently in Perth for the inquiry, but said in a statement that the regulation of the industry is already covered by a national code of conduct, the Trade Practices Act and the Australian Competition and Consumer Commission.

“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 says.

The FCA voiced its concerns in a submission to a Parliamentary inquiry into the private members bill. In its submission, the FCA has called for:

1. The abandonment of state-based legislation and regulation, with the national regulatory approach to be retained.
2. A moratorium on further regulatory changes until 2012-13, at which time the impact of the changes announced in mid-2010 could be reviewed.
3. An increased focus on education and dispute resolution, including funding for pre-entry franchisee education and early dispute intervention.

Wright says the council’s members, including franchisors, franchisees, service providers and suppliers, believe there is no need for “such highly interventionist legislation, given the very limited number of issues with contract renewal and the existing national legislative and regulatory frameworks in place”.

“Research undertaken last year indicates that 95% of member respondents do not support state-based legislation,” he says.

“And 90% said they would review their investment intentions in WA should state-based legislation be passed… so it is hard to see how this can be good for the state.”

But Professor Frank Zumbo, who drafted the bill, says WA franchisors should be excited by the prospect of state-based legislation as it would give them a marketing advantage over interstate rivals.

“WA franchisors can rightly say that the WA Franchising Bill provides all those dealing with a WA franchisor with the legal confidence that the franchisor fully complies with the Franchising Code and does the ethical thing by their franchisees,” he says.

“These will be great selling points for a WA franchisor trying to recruit franchisees in WA and gives them an edge over interstate franchisors.”