What would franchising be like under Labor?

The Coalition parties may be the natural allies of the small businesses that make up the franchising industry, but Labor’s small business spokesman Craig Emerson is campaigning hard in the franchising community.

One influential opinion maker in the franchise community described him as “impressive” following the National Franchise Convention held in Melbourne earlier this month. 

Two days ago, Emerson released his franchising policy.

The Labor party, if elected, would amend the Franchise Code to include good faith obligations – as long as the scope of the obligation is well defined – according to a policy document released by Emerson on 24 October.

In contrast, earlier this year the Howard Government rejected the recommendation of the Matthews Committee into franchising disclosure for such a provision to be added to the code, which is mandatory under the Trade Practices Act.

In its response the Matthews Committee, the Government pointed out that section 51AC of the TPA includes good faith as a factor in determining whether there has been unconscionable conduct.

Labor has endorsed the other changes proposed to the Franchising Code by the Howard Government. These include a requirement to keep the prospective franchisee better informed before signing up, and afterwards about supplier rebates, marketing funds, previous franchisees, and financial information of consolidated groups.

Labor’s franchising policy promises:

  • Labor would strengthen the Trade Practices Act with amendments to section 46 dealing with abuse of market power and predatory pricing. Business would be able to use the Federal Magistrates Court to pursue predatory pricing.
  • Labor would give the ACCC more powers to investigate predatory pricing and prosecute serious cartel conduct as a criminal offence. And review creeping acquisitions leading to market concentration.
  • Simplify the awards system
  • Reintroduce unfair dismissals – to apply after an employee has been with a business more than a year.
  • Provide fair dismissal code and “there will be no go-away money”.
  • Adopt a “one-in, one-out” principle for federal government regulation so when a new regulation is proposed, one must be removed.

The Government has not released a specific franchising policy.

For more on the parties policies for small and medium business see our Election 2007 special and these stories.


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