WA looks to tighten franchisee rules

The West Australian Parliament has followed South Australia’s example by introducing proposals to protect franchisees from “rogue” franchisors.


WA Liberal MP Peter Abetz has put a bill before Parliament, less than a month after the South Australian government adopted Labor MP Tony Piccolo’s reforms to redress an imbalance between franchisors and franchisees.


Proposed reforms in both states include the ability to enforce penalties under the Franchising Code of Conduct and put into law the obligation of good faith in negotiations between franchisors and franchisees.


The bills define good faith as acting fairly, reasonably, honestly and cooperatively.


The South Australian bill was attacked by the Franchise Council of Australia, with the lobby group’s executive director Steve Wright telling StartupSmart.com.au that the proposals would take a “sledgehammer” to the industry.


However, professor Frank Zumbo, the University of New South Wales academic who drafted both bills, says they are totally consistent in their objective, nature and scope.


“Initially, I drafted the South Australian bill as a template that could be adopted around Australia, and that template has been adopted by Western Australia,” he says.


“It’s very pleasing and a recognition of the need for action in this area. You’ve now got two states that are very serious about this legislation and two states that recognise there are ongoing problems in the sector.”


“Those two bills are consistent and that gives rise to a nationally consistent approach if those bills are adopted by other states.”


Zumbo says the reforms grant franchisees legal certainty in relation to full compliance with the franchising code.


“Franchisees across Australia will also share in those benefits because one would expect a good franchisor to continue to behave well and appropriately across Australia,” he says.


The professor says franchisors have nothing to fear from the legislation providing they are compliant with the code and are already behaving in good faith towards their franchisees.


“This legislation is only directed at those rogue franchisors who are giving the sector a bad name,” he says.


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