Franchisee representative groups have responded with disappointment to Labor’s franchising policy released last week.
George Parkis, spokesman for the Australian Franchisee Alliance, describes the policy as “airy fairy”. “It’s great that they are looking at strengthening the Franchising Code, but they don’t spell out how they are going to do it.”
He argues the ACCC needs more funding to look at small matters. “They haven’t got the people. They can’t handle what’s out there at the moment. They are very bureaucratic about it.”
John Farrell, federal president of the National Federation of Independent Business, describes the policy as containing “a barrage of irrelevant waffle”.
He says: “The issue of churning stands out as the primary ‘robbery’ mechanism in franchising… The real problem is the gross inadequacy of the 250 strong ACCC enforcement group in matters to do with small business.”
However, Farrell applauds the obligation in the policy for the franchisors to provide the contact and financial performance detail of past Franchisees on any site in its pre-sale disclosure, which is a policy also held by the current government.
But he points out that this initiative by itself will not solve franchise churning because “exiting” franchisees may well misrepresent the financial case for their own personal benefit. “The answer is to change the culture by eliminating the ‘rogue operators’, as (ACCC chairman Graeme) Samuel calls them, preferably by a lengthy jail term for deliberate robbery. The NFIB recommends this as the only practical ‘fix’.”
Other franchisees have adopted modern lobbying tactics to make their point. There is a YouTube video having a go at Kevin Rudd and his policy. You can view it here.