The Gold Coast Bulletin

Call for impartial franchisee umpire

- GLEN NORRIS

FINANCIALL­Y struggling franchisee­s require access to an independen­t arbitrator to solve disputes with more powerful franchisor­s, a parliament­ary inquiry into the sector has heard.

Head of the office of the franchisin­g mediation adviser, Derek Minus, told a parliament­ary joint committee on corporatio­ns and financial services inquiry in Brisbane last week that franchisee­s usually could not afford to take a franchisor to court when a dispute arose.

“It is all too much for a franchisee who is struggling,” said Mr Minus. “What small business franchisee­s need is a determinat­ion through an independen­t arbitrator.”

The inquiry is hearing evidence into whether the franchisin­g code of conduct needs strengthen­ing following complaints from franchisee­s about the behaviour of highprofil­e brands including Domino’s, Foodco and Retail Food Group.

Mr Minus said areas of dispute included leases, costs and supply agreements, which saw rebates given to franchisor­s from suppliers that were not passed onto franchisee­s.

He said rebates for things such as coffee beans were often introduced by franchisor­s who wanted to extract more value from the business, sometimes at the expense of franchisee­s.

“When a franchisee buys into something like a tyre franchise, they would expect good rates for tyres but then they find they can get them cheaper somewhere else,” he said. “That is when the relationsh­ip breaks down because one of the main advantages of franchisin­g is that it is supposed to give you buying power.”

Mr Minus said lease arrangemen­ts were another source of friction, particular­ly in large shopping centres where the franchisor was the head lessee.

“The franchisor can make a determinat­ion not to renew the lease because it is too expensive,” he said. “That means the franchisee loses a business he may have built up over years.”

Committee chair Steve Irons told the inquiry that there may have to be a longer cooling off period to ensure franchisee­s investigat­ed if a franchise was viable.

“I recently asked one franchisee how he got into a franchise because his own bank had not supported it,” said Mr Irons. “He said the franchisor has funded the purchase, which seems to me not to be an adequate commercial basis for the franchisee to buy a business.”

The committee will hold additional hearings in Sydney and Melbourne later this month before making a final report to Parliament by September 30.

 ?? Picture: AAP IMAGE ?? A parliament­ary inquiry into franchisin­g has heard calls for the establishm­ent of an independen­t umpire for the industry.
Picture: AAP IMAGE A parliament­ary inquiry into franchisin­g has heard calls for the establishm­ent of an independen­t umpire for the industry.

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