FOOD FOR THOUGHT ON GROUP’S BATTLES

A FORMER Gold Coast Brumby’s franchisee, who did not want to be named, said the recommendations on supplier rebates would have made a big difference to his business. The inquiry called for the Franchising Code of Conduct to be amended to ensure any kickbacks from suppliers to franchisors were fully disclosed on each transaction and in the franchise disclosure document. “One of the things you buy into when you take on a franchise is the buying power with suppliers,” the franchisee said. “It was one of the major reasons I signed up as a franchisee.” The franchisee said before RFG bought the Brumby’s brand, franchisees were paying up to 20 per cent less than market price for supplies like flour and milk – but that situation was reversed under the new regimen.

“As soon as RFG took over, it was the opposite,” he said. “You could walk into the supermarket and buy flour cheaper than you could buy it from RFG.”

SMALL and Family Business Minister Michaelia Cash said the Government welcomed the report, saying its recommendations were “detailed and complex”. “The Government is committed to supporting effective and fair reforms to the franchising sector without imposing unnecessary regulation on the sector,” she said. “The recommendations raise a wide variety of issues that impact multiple pieces of legislation beyond the Franchising Code of Conduct. “They will need to be carefully considered in the

context of other work the Government is undertaking, in areas such as unfair contract terms and the development of an Automotive Code of Conduct. “The Government will carefully analyse the report and consider what improvements need to be made before proceeding.”

MADDISON Johnstone of

advocacy group Franchise Redress said franchisees felt like their concerns were finally being taken seriously. “They have already expressed huge relief and joy at what is in the report,” she said. “It’s been a long journey and a lot of them have lost a lot along the way.” Ms Johnstone said the crackdown on “churning and burning” of stores, where franchisors repeatedly sell the

same failed store to new franchisees, would make a difference if adapted. “We think it is crucial for franchisees that the ACCC be allowed to step in before it becomes a big problem.”

The Australian Securities and Investments Commission would not say whether it was currently investigating RFG. “We will examine the

recommendations of the parliamentary committee as they relate to ASIC but cannot comment on whether we are investigating Retail Food Group.”

A STATEMENT from the Australian Taxation Office said it was still considering the recommendations of the report. “In line with standard procedure, the Government is

required to respond to Joint Committee recommendations within three months of their presentation,” it said.

Australian Competition and Consumer Commission commissioner Mick Keogh said the decision to implement the recommendations lay largely with the Government. “For Retail Food Group we can confirm there is an

investigation under way on that one, but we don’t tend to comment any further on investigations.” He said the ACCC had other investigations under way into the sector, but most of them were subject to Government decisions about whether to proceed.

RFG executive chairman Peter George said the company supported any changes which would benefit the industry. “The current management team and Board completely understand that RFG’s future success is directly linked to the profitability of its franchisees,” he said. “We have instituted a comprehensive program of investment and improvement to materially help existing and new franchisees grow and prosper.”