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Franchise council hits back over WA regulation

Friday, 12 November 2010 | By Michelle Hammond

The Franchise Council of Australia has hit back at claims that it has been “scaremongering” over the controversial WA Franchising Bill.

 

Associate Professor Frank Zumbo, who drafted the bill, says the FCA “should take a cold shower and settle down” over its public criticism of the proposals.

 

 

 

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

 

It came less than a month after the South Australian government adopted Labor MP Tony Piccolo’s franchise reforms.

 

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

 

WA-based franchisor Quick Service Restaurant Holdings, which owns Red Rooster, Chicken Treat and Chooks Fresh & Tasty, says it will move its corporate headquarters and 3,800 jobs east if the bill is passed.

 

 

QSR chief executive Mark Lindsay says the company would be at a disadvantage against eastern states competitors who would not have to meet the extra compliance burdens.

 

 

FCA executive director Steve Wright says WA’s multimillion franchise sector is at stake.

 

 

“If this bill lands in WA, expect to see millions of dollars of future investment in small business heading off in other directions,” Wright says.

 

But Zumbo says the FCA’s claims should be dismissed as “self-scaremongering” and WA franchisors are at no disadvantage.

 

“Good WA franchisors should be excited by the WA Franchising Bill as [it’s] giving them a marketing advantage over interstate rivals,” Zumbo says.

 

“WA franchisors can rightly say that the WA Franchising Bill provides all those dealing with a WA franchisor with the legal confidence that the franchisor fully complies with the Franchising Code and does the ethical thing by their franchisees.”

 

“These will be great selling points for a WA franchisor trying to recruit franchisees in WA and gives them an edge over interstate franchisors.”

 

According to Wright, franchise regulation should continue to come from a federal level to ensure no state is at an advantage or disadvantage.

 

“[Other states] can see that franchising is rightly regulated nationally, not by the states. Every state agreed with this two years ago. They have repeated that agreement since then,” Wright says.

 

Tony Conaghan, franchising partner at DLA Phillips Fox, says there is no need for additional state legislation in either WA or SA.

 

“If the legislation is passed, it would act as a disincentive to franchisors to open operations in those states because of the increased risk and compliance costs of managing different pieces of legislation,” he says.

 

The FCA has started a nationwide campaign to collect signatures opposing the WA bill at educational forums, and has also forwarded petitions to the government and opposition in each state.