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Federal MP Attacks Franchise Churning

Member for Gilmore Joanna Gash MP has blasted the Australian government for its franchising inaction and the Small Business Minister’s insistence that he will commit to nothing before the election lead up promises set to begin in 2013.

Some franchisors have introduced a new tactic whereby potential franchisees are compelled to sign a deed of surrender and release preventing future challenges to the franchisor, before they sign to a contract.

Aside from some serious moral questions in regard to that tactic, I wonder whether such an arrangement is legally defensible.  Media Release [attached]

This is not the first time the Australian House of Representatives has heard from Jo Gash or a number of other ministers of parliament incensed at the blatant disregard of abuses in franchising.

Given the previous minister’s inaction - in spite of all the adverse commentary - the hundreds of cases of failed franchises, evidence of the practice of churning and the heartbreak and the despair of victims, it is not hard to suspect that this is a strategy on the part of the government to quell debate.  Hansard p75   26 October 2010  PDF

Mrs Gash challenged the House and again criticised the franchising regulator.

The franchisor hides behind these agreements, and the ACCC refuses to look beyond them. Is there anyone on the government benches with the courage to argue that these new deeds of silence are not unconscionable or are not harsh and oppressive?

The Australian government has been charged with encouraging franchisee churning.

Mrs Gash first raised the issue of franchisor opportunism back in 2007 when she spoke out in support of Deanne de Leeuw, one of her constituents, who was a former franchisee of Bakers Delight.  BDL

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