Franchising Council examines independent investigations officer to address complaints

The Franchise Council of Australia is understood to be considering the establishment of an independent investigations officer to look into complaints about the industry, following a week of fiery debate about the health of the industry.

It’s believed the FCA is looking to appoint an independent officer who would investigate complaints about the industry. Under the model being looked at, information gleaned by this officer could then assist with peer counselling and specifically targeted education.

This follows moves by South Australia and Western Australia Parliaments to introduce state-based franchising legislation, in addition to Federal legislation, citing concerns existing regulations are too lax.

It also follows concerns by Shadow Small Business Minister Bruce Billson and Australian Competition and Consumer Commission chairman Rod Sims over the relationship between franchisees and franchisors, and the number of complaints the $128 billion-sector attracts.

After ACCC chairman Rod Sims said this week it was “difficult” for him to ignore 600 complaints about franchising to the competition regulator in the last financial year, Billson told SmartCompany that the relationship between franchisees and franchisors is “potentially a brittle one”.

“If difficulties arise, the franchisors clearly to have the whip hand, and that tends to escalate tensions if people don’t feel they’re not getting the respect they deserve,” Billson said.

“And the circumstances where the relationship doesn’t recover seems to happen too frequently.”

Billson also argues that Western Australia and South Australia are moving to introduce state-based legislation because Small Business Minister Nick Sherry had “packed up his bags on franchising” by refusing to review the relevant Australian Consumer Law earlier than 2013.

But Sherry has rejected the Coalition’s calls to speed up franchising regulation, arguing key reforms introduced over the past year are the result of years of consultation and review, and should be given a chance to bear fruit.

Sherry says changes to the Franchising Code of Conduct “give franchisees more protection, more transparency and greater certainty when they deal with franchisors.”

He also says that it’s too early to judge changes to the Australian Consumer Law, which came into effect this year.

“They’re not even a year old and we need to see how they operate so we can judge their effectiveness and make any necessary changes.”

“We will do this with a full review of the Code in 2013 – until then, the sector deserves to operate in a stable environment and with confidence.”

“It is time the Coalition itself started showing good faith to the franchising industry and spell out exactly what it would do, instead of flip-flopping from one position to another.”

Sherry and Billson agree the Commonwealth should have sole responsibility of franchising, rather than forcing franchises to operate under specific state-based laws, as proposed by SA and WA. They also agree that “good faith” provisions for franchising are difficult to introduce.