The South Australian Government has introduced a new combined bill into Parliament that would establish a small business commissioner as well as take measures to regulate the franchise industry.
Labor MP Tony Piccolo has been attempting to reform the state’s franchising laws for four years despite heavy criticism from the Franchise Council of Australia, which claims federal laws are sufficient.
In late 2009, Piccolo introduced a bill into state Parliament to redress an imbalance between franchisors and franchisees.
Proposed reforms included the ability to enforce penalties under the Franchising Code of Conduct, and putting into law the obligation of good faith in negotiations between franchisors and franchisees.
The bill lapsed due to a state election in 2010, although Piccolo insisted it would have complemented the existing Federal code while offering franchisees additional protection from “rogue” franchisors.
Yesterday, Piccolo announced that the small business commissioner legislation, introduced by Small Business Minister Tom Koutsantonis, had been brought before Parliament.
Piccolo said while the new bill is structured differently, it “will ultimately achieve the same objectives”.
“The Bill is a way of providing flexibility in achieving [Koutsantonis’s] objective of raising business behaviour standards in franchising,” Piccolo said in a statement.
Piccolo said the bill provides for civil monetary penalties – for breaches of prescribed codes of conduct under the Fair Trading Act – and for civil expiation penalties.
Once the bill is enacted in SA, Koutsantonis will have the ability to prescribe mandatory codes of conduct under the Fair Trading Act, which could include a statutory duty of good faith as well as other standards of conduct in franchising.
“Once passed, the bill will provide mum-and-dad business owners with a quick and fair process to protect themselves from predatory behaviour from other businesses,” Piccolo said.
However, an FCA spokesperson said the bill is a “non-transparent attempt” to pass industry-specific legislation.
“We were supportive of introducing a small business commissioner in a role similar to that in Victoria because it provides low-cost dispute resolution,” the spokesperson said.
“But this South Australian model seems to just be franchising legislation through the back door, and it will see three different bureaucracies looking at the same things.”
In contrast, disgruntled franchisees have welcomed the bill, with one franchisee describing it as a “massive boost” for the industry.
Trevor Banks, who operates a Wendy’s franchise in NSW, says the bill provides “a bit of light at the end of the tunnel” and is hopeful it will set a precedent for other states to follow.
“There are too many greedy franchisors and the benefits are not being shared… The franchisors are the stakeholders – they take all the risk but get very little of the reward,” he says.
Similarly, Cheesecake Shop franchisee Brad Skuse – who operates an SA store and recently set up an anti-franchising site – is in “full agreeance” of the bill.
“It needs to happen, and it needs to be backed up on a Federal level – more of an umbrella,” he says.
“Getting the bill into South Australia will hopefully get the attention of Canberra. Maybe they’ll take it a bit more seriously then.”