The Franchise Council of Australia is going to complain to parliament about the conduct of MP Peter Abetz, Senator Nick Xenophon and the executive director of the Council of Small Business of Australia, Peter Strong.
Kym De Britt, general manager of the FCA told SmartCompany he is “most concerned” about the “inflammatory and intimidatory conduct” of the trio who attempted to attend a mediation between former Wendys franchisee, Peter Coventry, and Wendys this week.
Abetz, Xenophon and Strong were locked out of the mediation but De Britt says there is no cause for complaint.
He says mediation is meant to be a private matter and Wein report recommendations, supported by both parties and the FCA, include additional obligations in relation to good faith.
“On any fair assessment of this matter, the politicians, the franchisee and the franchisee’s legal advisor acted in a highly inflammatory manner and in our view contrary to good faith obligations,” he says.
“The politicians should have known better as they completely flouted the intention of mediation, and arguably aided and abetted a breach of the Code by the franchisee.”
De Britt says Abetz, Xenophon and Strong’s conduct was “entirely disrespectful” of the position of the independent mediator appointed to assist the parties to resolve the matter and “almost certainly” helped “torpedo” any prospect of a mediated outcome.
He notes the confidentiality undertaking which is part of the mediation would not affect the politicians’ ability to make comments under the protection of parliamentary privilege, as Abetz has done previously.
The FCA claims Wendys was only aware of the request for the politicians and Strong to attend the mediation after the close of business on Friday, so they turned up “essentially unannounced”.
“In our objective view it is clear that the franchisee had no genuine intention to mediate in good faith, but rather this was a publicity stunt or designed as leverage against the franchisor to extract financial reward for the franchisee,” De Britt says.
The FCA says it will draw the matter to the attention of the Office of Franchise Mediation Adviser, the Australian Competition and Consumer Commission and the Federal Parliament.
“Mediation is integral to the success of Australian franchising, and it is vital that all participants in mediation comply with the requirements and intent of the Code to give the parties the best chance of reaching a resolution.,” De Britt says.
He says Abetz’s comments to SmartCompany that the franchisor has something to hide due to what occurred is both unfair to the franchisor and made with malicious intent.
“It also fails to recognise the impact such comments will have on the other franchisees in the Wendy’s system,” De Britt says.
“Let’s just hope this sort of conduct remains an isolated occurrence, as the last thing the sector needs is politicians and others abusing the process for their own ends or interfering in a semi-judicial process with a breathtaking level of ineptitude and lack of judgement.”
Coventry told SmartCompany he rejected the FCA’s conclusions and welcomed a full and thorough investigation by the Office of Franchise Mediation Adviser, the ACCC and parliament.
“If Wendys had a case against me and nothing to hide then why didn’t they jump at the opportunity to tell their side of the story in front of such a respected, experienced and objective group of people?,” he says.
Abetz says the FCA’s claim that he has broken confidentiality agreements is “false and defamatory”.
“I am not sure what is inflammatory and intimidating about when two MPs with an interest in franchising are invited by a franchisee to sit in on a mediation process,” he says.
Strong says COSBOA’s focus is on small business.
“When a business has more power than a small business then we want to make sure there’s good faith and that’s why we were involved in the mediation,” he says.
SmartCompany contacted Xenophon for comment but did not receive a response prior to publication.