undergo a review<\/a> after submissions close next week.<\/p>\n <\/p>\n
According to NFC founder and chairman Peter Coventry, who is based in WA, the current code offers franchisees little protection from \u201crogue\u201d franchisors.<\/p>\n
<\/p>\n
\u201cWithout clear expression of the mutual obligation of good faith in the code, supported by robust and fair penalties for breaches, the code remains something of a toothless tiger that allows opportunistic franchisors to operate,\u201d Coventry said in a statement.<\/p>\n
<\/p>\n
\u201cGood faith in franchising has never been anything more than addressing the power imbalance in the franchisee-franchisor relationship.\u201d<\/p>\n
<\/p>\n
According to the NFC, the review should address the following three issues:<\/p>\n
<\/p>\n
1. Good faith<\/b><\/p>\n
<\/p>\n
The NFC believes the code should incorporate a specific definition of \u201cgood faith\u201d so that acting in good faith means acting fairly, honestly, reasonably and cooperatively.<\/p>\n
<\/p>\n
The federal government chose not to include a good faith clause in its 2009 review of the code, but the 2013 review has left the possibility open.<\/p>\n
<\/p>\n
While advocates say a good faith clause would ensure franchisors cannot act in a way that is detrimental to franchisees, the Franchise Council of Australia has argued such requirements are already implied in national law.<\/p>\n
<\/p>\n
According to the NFC, the FCA\u2019s resistance towards a good faith clause is \u201cakin to opposing motherhood\u201d.<\/p>\n
<\/p>\n
2. Penalties<\/b><\/p>\n
<\/p>\n
The need for penalties goes \u201chand in glove\u201d with the need for penalties that deter poor franchisor behaviour and appropriately punish franchisors for opportunistic behaviour, the NFC said.<\/p>\n
<\/p>\n
3. End of term arrangements<\/b><\/p>\n
<\/p>\n
According to the NFC, end of term arrangements remain a contentious issue \u2013 one which has fuelled the practice of \u201cchurning\u201d in the franchise industry.<\/p>\n
<\/p>\n
Churning, as defined by the NFC, is where franchisors terminate a franchise agreement because of perceived breaches, or refuse to renew a franchise agreement, and then move to take over the franchise or on-sell it without paying for the goodwill, and pay little or nothing for the franchisee\u2019s fixtures and equipment.<\/p>\n
<\/p>\n
Where a franchisor declines to renew their franchise agreement and either takes over the business or sells it on to a third party, the NFC said the code should require franchisors to pay the departing franchisee the value of the goodwill developed by the non-renewed franchise, plus fair compensation for plant and equipment.<\/p>\n
<\/p>\n
Earlier this week, a former Bakers Delight franchisee told StartupSmart<\/i> how the company \u201cstole\u201d his business<\/a> after his franchise agreement expired and he indicated a desire to go independent.<\/p>\n <\/p>\n
Coventry said the NFC\u2019s proposed measures would \u201cgo a long way\u201d to restoring the reputation of the franchise industry, and would make it safer and more attractive for people to invest.<\/p>\n
<\/p>\n
\u201cThese issues should be addressed, and these recommendations adopted, because it will only result in better outcomes for both franchisees and franchisors,\u201d he said.<\/p>\n
<\/p>\n
\u201cIt will make both work harder for each other\u2019s benefit, which is the ultimate win-win outcome.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
The National Franchisee Coalition has outlined its wish list for the federal government\u2019s review of the Franchising Code of Conduct,<\/p>\n","protected":false},"author":1,"featured_media":59884,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/43271"}],"collection":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/comments?post=43271"}],"version-history":[{"count":0,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/43271\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media\/59884"}],"wp:attachment":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media?parent=43271"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/categories?post=43271"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/tags?post=43271"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}