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WA Franchising Bill: McDonald’s Supports Opposition

McDonald’s joins opposition to WA Franchising Bill

By Michelle Hammond
Monday, 28 February 2011

Fast food franchise McDonald’s has thrown its weight behind opposition to the WA Franchising Bill, clashing with the owner of major rival Hungry Jack’s.

 

In its submission to a Parliamentary inquiry into the Bill, McDonald’s argued the industry is already well regulated and the introduction of state-based laws would discourage firms from setting up in WA.

 

“Any new legislation at state level will add compliance costs and is a totally unnecessary duplication,” McDonald’s managing director Catriona Noble said.

 

“We have seen no evidence of material problems in the franchise sector. However, if there are problems, they should be fixed at a Federal level in the franchising code or by Australian Competition and Commission action.”

 

Last year, WA Liberal MP Peter Abetz caused an industry uproar with his proposal of state-based franchising laws, claiming franchisees need further protection from “rogue” franchisors.

 

The introduction of state-based legislation would add to recent Federal laws by specifying that renegotiation of franchise agreements in WA be in favour of existing business owners and that the parties must negotiate in “good faith”.

 

Abetz says he realised the extent of the problem when a battle ensued between Cowin and Yum Foods International, which owns KFC.

 

Competitive Foods Australia, owned by franchise veteran Jack Cowin, operates 300 Hungry Jack’s outlets around Australia, and 40 KFC restaurants in WA and the Northern Territory.

 

When Cowin resisted a Yum buyout in 2007, the company failed to renew his franchises, saying they had expired.

 

Cowin has since launched a website supporting the legislation. However, the Franchise Council of Australia argues that Parliamentary submissions overwhelmingly opposed the campaign.

 

According to the FCA, about 120 submissions have been made to a WA Parliamentary inquiry, 90% of which are opposed.

 

FCA executive director Steve Wright said in a statement the submissions are proof that Abetz has failed to undertake any meaningful consultation prior to introducing his bill.

 

“It is a poor reflection on due process… It has the hallmarks of vested interest campaigning rather than responsible policy development,” Wright said.

 

“Any serious attempt at consultation would have immediately detected the widespread opposition to this bill, and to the regressive concept of introducing state-based legislation in a nationally operating, comprehensively regulated and successful sector.”

 

Wright said Cowin’s “commercial motivation” is understandable but it is a not a sufficient reason for the WA Parliament to support the legislation. The Bill is still before an inquiry.

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