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WA union leader backs franchise reforms

Friday, 11 February 2011 | By Michelle Hammond

WA union leader Joe Bullock has thrown his weight behind proposed franchise reforms, labeling Liberal MP Peter Abetz as “courageous” for pushing for change in the face of fierce opposition.

 

Last year, Abetz introduced a private member’s bill to strengthen the rights of WA franchisees, triggering a wave of opposition among his Liberal colleagues.

 

The legislation, which is now before a committee, sought to add another layer to recent federal laws by specifying that renegotiation of franchise agreements in WA be in favour of existing business owners, and parties must negotiate in “good faith”.

 

In addition to maximum penalties of $100,000 per act for a company, franchisees would be able to claim personal damages including from mental impairment and economic loss.

 

Bullock, WA secretary of the Shop, Distributive and Allied Employers’ Union, says the legislation will help protect the jobs of workers in the fast food industry by giving business owners more certainty.

 

“The principle issue affecting our members is the concept of good faith bargaining at the end of a franchise term. I think there is merit in protecting franchisee rights,” Bullock says,

 

The draft law has been met with hostility by the Franchise Council of Australia, which argues franchisors should be able to replace underperforming operators.

 

FCA executive director Steve Wright says WA’s multimillion franchise sector will be compromised if the legislation is passed.

 

“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.

 

“With increased compliance costs, a disincentive to investment in WA and duplication of the national regime, this approach is all risk with no benefit.”

 

But according to Abetz, a significant number of franchisors are using their superior position to the detriment of their franchisee partners, citing franchisor Yum Foods International as an example.

 

Abetz says he realised the extent of the problem when a battle ensued between Hungry Jack’s founder Jack Cowin and Yum Foods.

 

Cowin is also the owner of a large number of KFC franchises. When he resisted a Yum buyout in 2007, he was told it would not renew his franchises.

 

Abetz says he has researched widely on the issue of rogue and unethical franchisors, and has spoken with many franchisees about it.

 

“The horrific situation facing many mum and dad franchisees has been highlighted both here and in other states in recent media reports,” he says.