New franchise dispute study

The Australian Competition and Consumer Commission will fund – to the tune of $120,000 in cash and in kind – research into ways to reduce conflict in the franchising sector.

ACCC Commissioner John Martin denies the move is in response to criticism of the ACCC over inaction in franchise disputes. “It’s a natural evolution… We are learning as we go along… it will help us get an idea of where the boundaries are.”

He also denied it is in response to the growing public profile of some long-running disputes in the franchising sector. “We don’t feel that there is a high level of disputation. This is more to do with mainstream franchises.”

The ACCC approached researchers at Griffith University, which has also received an Australian Research Council linkage grant worth more than $100,000, to research the causes and characteristics of conflict in franchise systems.

Project head and Griffith Business School dean of learning and teaching professor Lorelle Frazer, says the research will provide an analysis of the most effective methods for anticipating and avoiding conflict, and a framework for addressing them.

Martin says there is a need for the research as the regulator is often called in too late in franchise sector disputes. “The ACCC is usually contacted once an issue has escalated into a dispute, which makes it harder to maintain an ongoing business relationship. In extreme cases, disputes may result in the loss of a business or even an individual’s livelihood.

“Through the research it will be possible to identify early warning signs that a problem is arising so people involved in franchise systems will know to contact the ACCC to intervene, and provide a solution.”

The research will particularly look at what causes unconscionable conduct. “It’s a vexed issue when tough competitive behaviour becomes more than that and starts to stray into unconscionable conduct.”

Martin says the ACCC will use the research results to work with the industry to better educate franchisors and franchisees and help them comply with the Trade Practices Act.