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ADELAIDE, Australia – Displeased with the recent federal reform of franchise law, a member of the South Australian state parliament announced today that he will launch his own bill at the state level. South Australian State Labor MP Tony Piccolo says that federal changes to franchise law that were announced ten days ago are “significantly inadequate.”
Small Business Minister Craig Emerson announced on November 5 changes in Australia’s federal franchise law, almost a year after a joint parliamentary inquiry made recommendations for sweeping changes. The inquiry was initiated by parliament after a spat of franchisee complaints and allegations of scams hit the media circuit.
State MP Piccolo emphasizes that Emerson’s federal code amendment lacks teeth. “It is unfortunate that the Minister has cherry picked from the recommendations made by the Federal Committee,” states the MP. “For the Minister to establish yet another process to look into other provisions is really just a cruel joke to those franchisees who are being screwed over by rogue and unscrupulous franchisors.”
Melbourne-based Stephen Giles, director of the Franchise Council of Australia’s regulation and government relations efforts, has a different take. “The Federal Government consideration of the issues was comprehensive, and included consideration of the report he [Piccolo] authored,” he said. “The conclusions of the Federal Government were consistent with those of previous reviews, and have bi-partisan support.”
But Piccolo thinks that despite his early support, the national law that eventually emerged is weak in at least three areas. It has not incorporated basic penalties for a breach of the regulation nor provided adequate dispute resolution. He also thinks that there needs to be a requirement of good faith in a franchisor’s dealing with franchisee. “The courts have already determined that an implied duty of good faith dealing already exists,” states Piccolo. “It is not a huge leap to make that “implied” duty into a positive “explicit” requirement”
Piccolo emphasizes that the federal proposed changes will not lead to any significant changes to the practices of rogue franchisors and that it still leaves franchisees at their mercy. He says that he has received state labor caucus approval to draft legislation. “I will be pursuing State based law reform in view of the Federal Minister’s recent announcements,” he stated.
Jason Gehrke, director of the Franchise Advisory Centre, who advises start-up franchisors and franchise buyers, thinks that state-level franchise laws are a bad idea. "Any separate legislation of franchising at state level is manifestly undesirable,” he states.
FCA lobbyist Giles agrees. He declares that the position of the FCA is that franchising is a national activity, and any form of State regulation is totally inappropriate. In an email to Blue MauMau, he writes, “Mr Piccolo has actually acknowledged this in a recent letter to the FCA, where he says "In particular it is desirable that regulatory framework be developed and implemented at a national level".
Mr Piccolo anticipates that the bill will be introduced into State Parliament later this month or early December.
Giles states, “Whilst the FCA is always happy to engage with politicians and others to discuss ideas to improve Australian franchising, there is no prospect of the FCA supporting any form of State based regulation.”