WA franchising Bill rejected by Liberals

The Western Australian state government party has rejected a Bill that would’ve placed extra regulations upon the franchise industry.

Last month, WA Liberal MP Pete Abetz put the Bill before the WA Parliament in a bid to protect franchisees from “rogue” franchisors.

If passed in WA, the Bill would enable franchisors who break the law to be fined up to $100,000, and also includes a statutory definition of good faith.

WA Premier Colin Barnett told The Australian Financial Review that Mr Abetz had the right intentions but the bill would have put, “Parliament and the law between standard commercial relations.”

The Bill has been the subject of a better public debate between its author, University of New South Wales associate professor Frank Zumbo, and the Franchise Council of Australia.

Zumbo accused the FCA of “scaremongering” after FCA executive director Steve Wright said the bill would cripple the WA franchising sector.

Federal small business minister Nick Sherry welcomed WA’s move to reject the Bill, stating that franchising reforms should remain at a Federal level.

There are 69,900 franchising units in Australia with a total sales turnover estimated at $128 billion.

Sherry says the Federal Government has introduced a set of franchise reforms, which will come into effect on January 1, 2011. These include:

• The ACCC will have more authority to investigate and take action against breaches of the national Franchising Code of Conduct, including increased power to source information and the authority to issue public warning notices about rogue operators and to seek redress for franchisees affected by a breach of the code.

• The new Australian Consumer Law, which will also take effect on January 1, 2011, will grant power to the ACCC and the State consumer bodies to take action against misleading and deceptive conduct and unconscionable conduct towards small businesses, including franchisees.

• Earlier this year, amendments to the code also came into effect to increase franchisor disclosure so that parties are more informed before they enter into a franchise agreement.

Sherry says the changes will need time to “bed down” and the government should allow an extended period to assess their impact.

“To do this, and to provide the sector with stability and confidence, the government doesn’t intend to review the code again until before 2013,” he says.