Australia’s Franchising Whipping Boy

CANBERRA Federal Parliament of Australia:  It would seem that Australia's Small Business Minister, Dr Craig Emerson, has the thickest skin in Australia; or perhaps he is simply the thickest.  Franchisees, media and politicians from around Australia and from both sides of politics and at state and federal levels continue to agitate for urgent franchising reform.  Last week in Federal Parliament the heat was back on;

Steven Ciobo MP: "I plead on behalf of all of those people in the franchising sector for this minister and this government to start doing something. Eleven recommendations came from the committee, and I put it to the minister that, in the main, all 11 recommendations are relatively noncontroversial.

This minister and this government need to act. Stop stalling-people's lives are potentially being destroyed as a result of this government's inaction, and it is time that they did something.'

Undaunted, Craig Emerson seemingly has concluded that everyone is out of step except him.  Emerson said the Government's option paper [due July 10] was particularly interested in any changes to the code that would produce costs and risks to franchisors and franchisees.  A franchisee from the Prime Minister's electorate of Griffith summed it up this way;

‘This government was on the right track with federal Inquiries.  If you took Emerson out of the equation Australia was heading toward the best franchising regime in the world.  His options paper is his way of justifying doing nothing and wasting taxpayer money and time for 12 months to achieve nothing when the need is as obvious as his abuse of privilege.  Of course reform with come with costs but they will be a necessary shift of costs. He will make no attempt to balance the existing costs to incurred costs to fix what needs to be fixed. He is a dangerous p&^*k'

Steven Ciobo MP: Federal Parliament transcript 18 June 2009 (p83 PDF 1.25MB)

On 24 October 2007, the minister at the table said [Emerson]: ‘Good faith bargaining was rejected by the Coalition but we are embracing it.'

He highlighted it as part of his comments then that the Labor Party policy would be to enact a good faith bargaining principle in the franchise code. On the 23 May 2008, the Small Business Ministerial Council communiqué highlighted that the Australian government will:

‘... consistent with its pre-election commitment, consider the introduction of a well defined obligation for parties to bargain and negotiate in "good faith" as part of the franchising code of conduct.'

So there are hundreds of thousands of people out there who have spoken with me and other members on this side of the chamber and who were waiting for the Australian Labor Party to introduce its good faith bargaining proposition. This is a principle that those on this side of the House support as well, contrary to the assertions by the Minister for Small Business, Independent Contractors and the Service Economy.

We waited for the Australian Labor Party to carry through with its pre-election promise, and nothing happened. Nothing occurred and we were left waiting.

So when I saw the Joint Standing Committee on Corporations and Financial Services move to have an inquiry into the Franchising Code of Conduct and related matters on 25 June last year, I thought, ‘This will be the opportunity-this will be the excuse the minister will be using as to why he has not acted for so long and maybe this will be the reason that something will happen.'

The committee provided its report on 1 December last year. On 26 February, some three months later, we still had not heard anything. I was still waiting. People were calling me and saying: ‘What's going on? You're the shadow minister. You must know what the minister for small business is up to. Give us some direction.' I kept saying, ‘It has been three months. I am sure that at some stage the government will respond.' After all, by this stage it had been 18 months since the Australian Labor Party was elected and you would have thought that they would have had the opportunity to implement the policy by then, but no-there was still nothing.

So I put a question in writing to the minister. The minister said in his response to me that the government was ‘considering the report' and would ‘respond in due course'. I put the question in on 26 February and received a response on 4 June, and, interestingly, on 31 May-just four days before-the minister, out of nowhere, issued a press release where he said, ‘We will consult on franchise reforms.' So that was the big announcement!

That was the only big announcement that we have had about franchising after 20 months of the Australian Labor Party. That is the full extent of this minister's response to franchising-to put out one lousy press release.

In his response and throughout another day in Federal Parliament; the Minister for Small Business, Craig Emerson MP, never once mentioned ‘franchising', ‘franchisee' or ‘franchise'. He never referred to the franchising industry and distracted the House from the subject; yet again.  And he certainly never mentioned the outstanding work not performed by the much criticized ACCC.

Mr Emerson has been reported by the Franchise Council of Australia as opposing any reform that would influence the franchising industry.

Many educated franchising observers note Emerson's fallback position.  If pressured to concede on changes to the Franchising Code of Conduct and the introduction ‘unfair contract' terms legislation Emerson may be pinning his hopes on a failure of finding solutions within the Senate ‘Access to Justice' Inquiry.  Checkmate?  Denying any franchisee ability to test such reform in an affordable and therefore accessible forum would maintain the status quo for the financially powerful and influential franchisor lobbyist group and deny franchisee protection for at least another 10 years. 

I would suggest however that Emerson won't take a chance on the Senate Inquiry and will continue to block anything that may better arm generations of franchisees faced with potential financial ruin at the hands of rogue franchising.  It would seem that the only hope for the future of fair Australian franchising may rest solely with intervention by Prime Minister Kevin Rudd.  Emerson is proving himself to be an accommodating and enthusiastic FCA whipping boy.

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Stop Destroying People's Lives