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SA franchise bill attracts lukewarm response

Friday, 21 October 2011 | By Michelle Hammond

Proposed amendments to the Small Business Commission Bill, currently being debated in the South Australian Parliament, have received a mixed response from industry and government.

 

Earlier this year, the SA Government introduced a bill into Parliament to establish a small business commissioner as well as take measures to regulate the franchise industry.

 

Labor MP Tony Piccolo has been attempting to reform the state’s franchising laws for four years despite heavy criticism from the Franchise Council of Australia, which claims federal laws are sufficient.

 

In 2009, Piccolo introduced a bill into Parliament to readdress an imbalance between franchisors and franchisees, but the bill lapsed due to a state election in 2010.

 

In August this year, Piccolo announced that the small business commissioner legislation, introduced by Small Business Minister Tom Koutsantonis, had been brought before Parliament.

 

Piccolo said while the new bill was structured differently, it would “ultimately achieve the same objectives”, much to the disgust of the FCA, which labeled it a backdoor approach.

 

But amendments to the bill – put forward by the Liberal and Family First parties, along with two independents – have been welcomed by the FCA.

 

One amendment would ensure South Australian franchise owners aren’t disadvantaged compared to franchisors in other states, while another amendment requires industry consultation in order to discuss any possible change to a code.

 

The amendments would also restrict any changes to industry code with legislative approval.

 

FCA executive director Steve Wright is “cautiously optimistic” the amendments will pass.

 

“This is a key issue that we have noted is very contentious and complex... As a result, it’s been pushed very quickly through Parliament. In those circumstances, it’s hard to be clear about goals,” Wright says.

 

Meanwhile, franchise expert Frank Zumbo, who helped draft previous versions of franchising legislation, says it will be up to the members to decide whether the amendments are positive.

 

“Some are worthy and others would undermine the integrity of the bill... Obviously, the members would need to reflect on whether they want a bill that stands up for small business,” he says.

 

Members of the SA Government, including Piccolo, have hit out against the state Opposition over the amendments.

 

While Piccolo praised both independents and minor parties for playing a “constructive role”, he told SmartCompany the Liberals are trying to derail the bill altogether.

 

“Their amendments would gut the bill and deliver a victory to the top end of town, which the FCA want, but kick the small mum-and dad-business owner and farmer in the guts,” he said.

 

The Liberal party has argued that because the legislation deals with two separate issues – the franchising code and establishing a small business commissioner – there must be two different bills.

 

The news comes one week after the Australian Competition and Consumer Commission said it would focus on compliance in the franchise sector in order to “improve its standing”.

 

ACCC chairman Rod Sims said the competition watchdog will use new investigation powers to ensure the regulatory regime promotes confidence in the sector.

 

“The ACCC will continue to enforce the code of conduct and these new powers will allow the ACCC to do more, earlier, to support best practice,” Sims said.