SOUTH AUSTRALIA (Blue MauMau) - On 06 May 2008 the South Australian Parliament released their final report into their Inquiry in Franchising. Excerpts from the South Australian media release, made 07 May 2008:

"The South Australian Parliament's Economic and Finance Committee has recommended significant changes to the laws regulating franchising in Australia. 

Following 10 hearings and over 50 separate submissions the Committee tabled its report into Franchises today in Parliament.

The inquiry sought to examine the various duties and obligations between franchisees and franchisors and whether there was room for improvement in the existing Commonwealth and State regulations.

In the course of the inquiry the Committee heard often harrowing evidence from individuals whose businesses were lost - with the accompanying financial and personal devastation - through combinations of naïveté, franchisor opportunism, poor advice and a sometimes inadequate regulatory system.

Recommendations include changes to the Commonwealth Franchising Code of Conduct (the Code) and South Australian legislation, including:

• Compulsory federal registration with the Australian Competition and Consumer Commission (ACCC) of all disclosure documents;
• Full disclosure of franchisor financial reports with no exceptions;
• Full disclosure to potential franchisees of the risks of failure;
• Publication of the names of those who persistently breach the Code;
• Penalties for insufficient disclosure;
• Amending the Code to include a duty to act in good faith;
• Amending the Code to require parties to a franchise contract consider goodwill or other exit payments;
• A range of alternative dispute resolution processes - including a body such as a Franchising Ombudsman or franchising tribunal;
• Recognising franchisees' interests on the leases between franchisors and landlords;
• Enhanced education campaigns at State and Commonwealth level.

This Report is about giving everyone in the franchising industry - franchisors, franchisees and their thousands of employees - a fair go at realising their dreams." 

The full South Australian report (pdf, 104 pgs.) is posted on the Parliamentary website. 

The Western Australia report is posted on the WA Small Business Development Centre website. 

Both of these reports will now be tabled at the Small Business Ministerial Council later this month. As many of these recommendations have been made at previous government reviews, it will be interesting to see how the federal government responds.