Fair go franchises

New group wants clamp on unfair conduct

A NEW body r epresenting franchisees is calling for a crackdown on unethical franchisors, saying their conduct may make the industry’s business model unviable.

Calls by the Australian Association of Franchisees come as a parliamentary inquiry considers the effectiveness of the Franchising Code of Conduct ahead of a report due in February expected to recommend changes to the law.

Many franchise network operators have been accused of mistreating franchisees or associated with widespread underpayments of franchisee staff.

Chains including 7-Eleven, Domino’s Pizza, Donut King and Red Rooster have been among those in the spotlight in recent years.

The franchisee association wants new legal foundations to underpin the industry, and a stop to what it says is unethical conduct by franchisors.

“Franchising, as a business model, is on life support and needs urgent changes for there to be any chance of survival,” association president Matt Wheatley said.

“The AAF is calling on the parliamentary joint committee to make recommendations that will modernise franchising regulation and provide the balanced obligations and shared responsibilities that business partnerships require to flourish.”

The franchising sector em- ployed nearly 500,000 people and was a vital part of the Australian economy, the group said.

Witnesses had testified to a parliamentary committee that their businesses were destroyed by a power imbalance created by franchisors exploiting legal loopholes, it said.

At the time, the Franchisee Federation of Australia — the precursor to the AAF — made a submission outlining recommendations on redressing that power imbalance.

It suggested the code was built on incorrect foundations and that franchising was not transactional, which put it under the Competition and Consumer Act, but rather a form of investment and should be at least partly be governed by the Corporations Act.

“If the committee is to go close to correcting the massive and unjust power imbalance then it must reconsider the foundations on which the industry is built,” Mr Wheatley said.