Joanna Gash, a long-time agitator for franchisee rights and Liberal member for the Federal seat of Gilmore in New South Wales, told SmartCompany the FCA – which represents both franchisors and franchisees – has failed to address the power imbalance between the two.
Gash says while the issue is to some extent a bipartisan issue, she'd like the Gillard Government to set up a small business and family enterprises ombudsman, and require franchisors to negotiate in good faith.
She is also keeping an eye on developments in Western Australia and South Australia, where there are moves to make the franchising code of conduct a state law, and therefore place penalties on some breaches. Gash believes the ACCC, which oversees the code of conduct, is a "toothless tiger".
One franchisee involved in discussions to create the new group, who declined to be named because of a non-disparagement clause in their contract, says franchising has not delivered on its promises, and franchises do not see the FCA as acting in their interests.
"The thing about being your own boss and owning your own business just isn't true," the franchisee says.
"Yes, you do your own diligence, but in your franchise agreement you're not allowed to disparage the brand in any way, shape or form, so if anybody says they're looking to buy a franchise, you don't know if they're genuine, so you tell them, it's good.
"A lot of franchisees stick to the middle ground and say they're okay. In the last 12 months, people aren't saying that."
The FCA was not available for comment prior to publication.
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written by michael webster, May 20, 2011
There is a list of them at the IAFD website, www.franchise-info.us.
I would encourage any franchisee interested in forming a trade association to review the materials and get in touch with either myself or Steve Ellerhorst.
written by PompousGoose, May 26, 2011
The ACCC has the toughest Code in the world to regulate and does a terrific job as does the sector. Some 1000 brands and over 60,000 franchisees would suggest the Australian market is well and truly managed
It is naive to hear franchisees and Gash complain about fair dealing. This statement is usually code for, I didn't make any money and its the franchisors fault! When the ACCC considers complaints the most common issue is the poor trading of the franchisee ... the biggest reason for success is to follow the franchise system but time and time again when franchisees call foul it is due to them NOT following the system.
Gash needs to understand the role of the ACCC as the regulator, the role of the FCA as the educator and the role of the franchise brand which is required to disclose annually and provide support and guidance for the franchisee. The franchisor cannot guarantee success and indeed the franchisee needs to understand that business is very very risky ... yet when failure comes, and it often does to those that don't work hard, over capaitalise and don't follow the system they always blame the franchisor, the ACCC, the FCA and seek support from people like Gash.
Franchising is no panecea for success and small investors should understand that it's as risky as any other business.
As to a new association ... what are they going to do? Offer education? the FCA does heaps yet franchisees don't use it. Offer services? Like what ... disputation services? This is required under the Code. What else would an association offer that a good franchise brand doesn't already? The one thing they don't have is litigant lawyers and of course the Code stymies that activity. Perhaps advocacy ... to advocate what? More regulation on the most regulated franchise market in the world. What a waste of time ... for it is useless to compare the US with Australia ... different market and different law.
So Joanna should just read the volumes of parliamentary evidence on this issue and stop placating folks that should not have been in business in the first place. The private Member's Bills of which she speaks will never get up ... and if they did in some sort of miracle it would destroy good business practice and over regulate an already highly regulated market.
You need to find ways to work, one on one with your franchisor, to build bridges and make things better. Even if a large group manages to tighten a few franchise laws, this won't help an individual franchisee in a food court in Frankston. That franchisee needs to make the time, talk to the their BDM and franchisor and listen to some new ideas on how to make their business better.
I have sat across from many franchisees that just want to complain. And this puts franchisors on the defence and leads to a focus on compliance and eventual disputes. It has to be a two way street.
Maybe rather than setting up a new franchisee body, franchisees can just form a meetup.com group and get together and chat about issues that affect them and try to make things better. There are plenty of groups like this that are easy to administer and won't put the franchisors' or FCA's nose out of joint as much. Just an idea...
And if any franchisees in Melbourne want to get together, then I am happy to arrange it. Just go to www.meetup.com/melbourne-franchising-club