Liberal franchise policy

The Coalition has no plans for further reform in franchising, according to its answers to questions on franchising policy posed to both major parties by a franchise industry newsletter.

Late last month Opposition small business spokesman Craig Emerson released his franchising policy. The Labor party, if elected, would amend the Franchising Code to include good faith obligations – as long as the scope of the obligation is well defined.

Earlier this year the Howard Government rejected the recommendation of the Matthews Committee into franchising disclosure for such a provision to be added to the code, which is mandatory under the Trade Practices Act.

In its response the Matthews Committee, the Government pointed out that section 51AC of the TPA includes good faith as a factor in determining whether there has been unconscionable conduct.

The Coalition’s response does not make any promises for future law reform; although it does promise to assess the recommendations of the Productivity Commission’s review of retail tenancy “very carefully”. Also is will introduce a bill to apply criminal penalties for serious cartel conduct.

The Howard Government accepted many of the changes proposed to the Franchising Code by the Matthews Committee earlier this year. These include a requirement to keep the prospective franchisee better informed before signing up, and afterwards about supplier rebates, marketing funds, previous franchisees, and financial information of consolidated groups.

The Coalition’s response points to past achievements for the sector, including:

• The Howard Government has increased the penalties for anticompetitive conduct.
• Introduced a new predatory pricing prohibition.
• Giving the ACCC stronger search and seizure powers.
• Established the deputy chairperson position for the ACCC, for a small business person.
• Removing unfair dismissal rights for employees in small business.
• Benchmarking the states and territories in relation to regulatory compliance costs.