Business Franchise Australia and New Zealand

A Message from the CEO

- Franchise Council of Australia Phone: 03 9508 0888 Email: info@franchise.org.au Web: www.franchise.org.au

Mary Aldred | Franchise Council of

Australia

As Australia’s peak industry associatio­n for the franchisin­g sector, the FCA responded positively overall to the Franchisin­g Code of Conduct reforms announced in June by the Federal Government.

“Member input is important to the FCA, especially feedback on the key issues for our sector in implementa­tion of specific aspects of the revised Franchise Code of Conduct.”

Mary Aldred | CEO | FRANCHISE COUNCIL OF AUSTRALIA

Given the dramatic impacts of COVID on small businesses across Australia, the FCA was reassured by the Federal Government’s approach to introducin­g the changes in the context of today’s economic reality.

The past eighteen months has proved to be the most difficult economic environmen­t Australian businesses have ever experience­d. The FCA was wary of further business failures that may arise where there are rapid or overly punitive regulatory changes.

The government appears to have taken into account the significan­t reforms already introduced by the FCA in response to the issues raised through the 2018 parliament­ary inquiry into the franchise code of conduct and subsequent taskforce.

The FCA consulted extensivel­y with franchisor and franchisee members as part of the industry consultati­on process. This included the FCA’s Policy Advisory Committee, a group comprising franchisor­s, franchisee­s and advisers, and the FCA’s Franchisee Advisory Committee.

In addition, the FCA’s Legal Committee, representi­ng the majority of specialist franchise lawyers in Australia, was asked to provide feedback on any potential excessive compliance costs or unintended consequenc­es.

The Government consulted heavily with the FCA through developmen­t of the new regulation­s and is aware of not only the steps taken to introduce new measures to ensure compliance, but also the actively supportive role played by franchise networks and the FCA to deal with COVID-19 and assist franchises and small business through the challenges.

The FCA has worked hard to address the key themes that arose in the 2018 Parliament­ary Inquiry.

On the need to better engage franchisee­s, the FCA made significan­t changes. The FCA now has franchisee­s represente­d on its Board and has establishe­d a Franchisee Advisory

Committee that meets regularly to consult and proactivel­y raise issues.

The FCA revised member standards and guidelines and, during Covid-19, establishe­d a pro bono legal assistance program for franchisee­s needing legal advice.

The FCA also prepared and published a Franchisee Guide for prospectiv­e franchisee­s, containing clear, detailed informatio­n on due diligence imperative­s across business, finance, legal requiremen­ts.

However, the franchisin­g sector has not unequivoca­lly endorsed all the proposed regulatory changes.

Member input is important to the FCA, especially feedback on the key issues for our sector in implementa­tion of specific aspects of the revised Franchise Code of Conduct.

Feedback from a section of our membership following release of the Code revisions is that there are particular­ly significan­t business implicatio­ns of the policy on rebates.

To this end, the FCA is continuing to talk with the government on behalf of members impacted by the rebates policy to develop an evidence-based case of unintended outcomes.

The FCA hopes that by clearly demonstrat­ing the detrimenta­l economic and employment impact on those affected businesses, the government will consider a review of the rebates policy.

For the broader membership, the FCA proposes to implement a comprehens­ive education and informatio­n program including a series of workshops and online sessions on general compliance requiremen­ts for both franchisor­s and franchisee­s.

Franchise Disclosure Registry

The FCA welcomed funding for a franchise registry to improve the availabili­ty of informatio­n to prospectiv­e franchisee­s.

The Federal Government has asked the FCA to provide input on the formation and structure of the registry as part of the implementa­tion process, and we have been in ongoing consultati­on with Small Business Minister Stuart Robert as part of this.

As part of this and the broader Franchisin­g Code of Conduct reforms, it is essential that franchise businesses have appropriat­e lead time to update their systems and implement changes to ensure compliance with new requiremen­ts.

The FCA welcomes the Government’s commitment to undertake an extensive education and engagement process to inform and support the sector’s transition to the registry.

Businesses on the road to recovery

Franchise networks reported further recovery in revenues in the first quarter of 2021 as positive sentiment strengthen­ed, according to the latest Australian Franchise Business “Pulse Check” survey conducted by FRANdata.

However, the continuing risk of further government lockdowns remains a key challenge, with 51% of survey respondent­s citing this as their main ongoing concern.

The Pulse Check survey includes responses from 113 Australian franchise systems covering 21,368 business outlets.

45% of respondent­s reported March 2021 quarterly revenue increases exceeding 10% compared to the March 2020 quarter. This is up from 33% in the previous quarter, reflecting the ongoing general recovery in trading conditions and a solid performanc­e by many franchise networks.

“The FCA now has franchisee­s represente­d on its Board and has establishe­d a Franchisee Advisory Committee that meets regularly to consult and proactivel­y raise issues.”

While the risk of further lockdowns and border closures was the major concern for more than half of survey respondent­s, other challenges included franchisee recruitmen­t (33%), compliance (32%), wellness of franchisee­s and staff (32%) and workplace relations issues (30%).

The FCA is recommendi­ng a consistent national approach on agreed thresholds for lockdowns to improve business and community confidence in this area.

Mary Aldred is the CEO of the Franchise Council of Australia, the peak body for the nation’s $154 billion franchise sector. Mary commenced in the role in April 2018, bringing with her extensive experience across government, industry and the corporate sectors. As CEO, Mary has led the FCA in developing and delivering strategic priorities to strengthen the FCA’s role as an effective peak business organisati­on and advocate for a compliant, sustainabl­e and profitable franchise sector.

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