Franchisees could gain more rights under a private member’s bill introduced by Labor Senator Deborah O’Neill, which edged past the Senate with a three-vote majority on Monday night.
Labor, the Greens, One Nation’s Malcolm Roberts and crossbenchers Jacqui Lambie, Rex Patrick and Centre Alliance’s Stirling Griff backed O’Neill’s Fairness in Franchising Bill, which will now be debated in the lower house.
The passing of O’Neill’s bill would amend the Franchising Code by giving the Small Business Ombudsman the power to refer disputes between franchisees and franchisors to arbitration if mediation fails.
The bill would also increase fines for exploitative franchisors from $133,000 to $10 million.
Backing the bill is the office of the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), which says reforms will “help address the power imbalance that exists in this sector”.
“The reality is that most disputes don’t get to court because the little guys don’t have the resources to take the big guys to court,” an ASBFEO spokesperson tells SmartCompany.
“Arbitration levels the playing field somewhat because it’s an incentive to resolve the dispute,” the spokesperson says.
ASBFEO also supports the proposed increase in penalties for breaching the Franchising Code, which it says will deter franchisers from doing the wrong thing.
The bill comes after a parliamentary inquiry into the $180 billion industry called for an overhaul of the Franchising Code of Conduct.
Published in 2019, the franchising inquiry report put forward 71 recommendations, including adding the option of binding arbitration and greater penalties.
However, since the report was tabled in the Senate two years ago, the Coalition has not introduced legislation to address the issues it raised, despite saying it would.
Voting against the bill, Liberal Senator Ben Small said in Parliament on Monday the Coalition was not opposing the bill because it was “deaf to the plight of small business”.
Rather, Senator Small said the government opposed the bill because it “seeks to make a political pre-selection stunt out of what the government consider very real issues”.
Senator O’Neill, who is aligned to the largest union in New South Wales, the Shop Distributive and Allied Employees Association, is currently facing a preselection challenge against the federal Labor frontbencher Kristina Keneally.
“Our reforms will cover a much broader range of issues, in a more fundamental and carefully considered way, than those put forward by Senator O’Neill,” said Senator Small.