Franchise Bill Proposes Franchising Fix
South Australian MP Tony Piccolo has tabled the proposed Franchising (South Australia) Bill 2009 in the absence of an effective response by the Federal Government to numerous franchising Inquiries. Here is the Media Release from Mr Piccolo and attached is the Bill and the relevant extract from the South Australian Parliament Hansard:
Parties to a franchise agreement will have a duty to deal with each other in “good faith” if a Bill introduced into the South Australian Assembly is adopted when Parliament resumes next year.
The Bill was introduced by franchise law reform advocate Labor member of Parliament Mr Tony Piccolo. The Bill requires parties to a franchise agreement to “at all times, act in good faith”. Acting in good faith means to act fairly, honestly, reasonably and in a co-operative manner.
Mr Piccolo told parliament that the requirement to act in good faith “will, in my opinion, foster a more ethical approach to business in the franchise sector.” Mr Piccolo advised the parliament that “good faith dealing” was opposed by the Franchise Council of Australia”
“The Franchise Council of Australia, despite its public statements to the contrary, continues to oppose any meaningful reform of the code, which reflects its interest in protecting the big end of town.” said Mr Piccolo. Mr Piccolo said the FCA states that the provision would give rise to widespread litigation. “In my view this is a complete nonsense.”
“The FCA and other critics acknowledge that the courts have already found that an 'implied duty to deal in good faith' already exists.”
Mr Piccolo pointed out that a number of Canadian provinces have good faith dealing provisions in their franchising codes without a flood of litigation occurring. Mr Piccolo said the Manitoba Law Reform Commission in its final report on franchising in May 2008 said: 'the statutory provisions [for good faith dealing] essentially codify the common law duty of good faith in the franchise context.'
The Bill also creates a Commissioner for Franchising.
The Commissioner would have the power to mediate, conciliate and to arbitrate. Mr Piccolo said the Commissioner of Franchises would provide an efficient, effective and low cost mechanism for parties to a franchise agreement to resolve their disputes.
“It would overcome the deficiencies in the existing mediation provision provided for by the current franchising code of conduct.”
The Commissioner will have the power to collect and publish certain information. Mr Piccolo said “the current lack of reliable information regarding franchise disputes covers up the market failure that is occurring in the sector.”
The Bill provides for pecuniary penalties to be applied against parties who the courts find have breached the code.
Mr Piccolo said the Bill “will create in South Australia a fairer, more efficient and competitive environment for franchising to flourish in.”
Mr Piccolo said he introduced the Bill despite the fact it could no be revisited until after the election for the following reasons:
- It honours a motion passed by this house on 10 October 2009.
- The bill is important is because it outlines the scope of reform and legislative model available to state and territory movernments to introduce reforms to franchising should they choose to do so.
- The introduction of the bill keeps the issue of franchise law reform on the political agenda.
Mr Piccolo said the Bill will also facilitate further public debate within the sector, and feedback from various stakeholders would, in all probability, lead to a revision of the bill when it is reintroduced after the state election, should I be fortunate enough to be re-elected.
“This Bill also flags to the federal government that the states and territories are serious about franchise law reform.” said Mr Piccolo.
Mr Piccolo said when a franchise fails it is usually the franchisee who suffers. “The human toll is at times beyond comprehension.”
Mr Piccolo said the Bill will not help those who make poor business decisions.
“It will not help those who do not exercise due diligence before signing a franchise agreement—you cannot legislate for that—however, let us promote opportunity and not opportunism. “
Mr Piccolo said the Bill overcomes constitutional restrictions by applying the Franchising Code of Conduct set out in the Trade Practices Act Regulations 1988 of the Commonwealth, as a law of South Australia.
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| Franchising (South Australia) Bill 2009 Introduced Version 3 12 09.pdf | 33.57 KB |
| FRANCHISING Bill - Second Reading speech 3 Dec 09.pdf | 136.25 KB |
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Why the hell would the FCA be worried about more litigation?
Very few can afford it now, so why would it be any different if you change anything with 'the law'? Even if they don't like it, they will probaly fund the Franchisor's appeal anyway
I suspect their main concern lies with the potential powers bestowed on "the Commissioner"....there is no way Franchisors want to be forced to mediate 'in good faith'. Litigation concerns are nothing more than another FCA smoke screen for a Federal Minister that clearly displays zero grasp of the problems despite numerous inquiries pointing to a common theme
FRANCHISING NEEDS REFORMS AND LAWS NOW!!!!
Enough is enough....Mr Piccolo gets it, and good on him!!!
You only have to look a the people on the Board of the FCA to see that the time for change has come. The FCA is not revelant to the need for reform in the Franchise sector in Australia. Steve Wright from the FCA keeps his sunglasses on and just hits play when it comes to any questions about reform in the franchise sector in Australia. He knows the truth, but the truth about the true state of Franchising never comes out. You can not deal with rogue Franchisors unless there is a clear understanding of good faith in the laws of Franchising. You only have to look at former board member of the FCA, Phil Ciniglio of MarketMinds and former CEO of Forte School of Music that the laws and the ACCC do not protect people from the rogue Franchisors like Forte School of Music Directors Gillian Erskine, Paul Myatt and former CEO Phil Ciniglio. These people breached the Franchise Code of Conduct on numerous occasions and what has the ACCC done NOTHING. Phil Ciniglio is still out there selling himself as Mr Franchise. Steve Wright will one day be gone from the FCA but things will not change unless the laws are changed to protect people.
Quite possibly my old mate Steve is acting in good faith with his obligations to his employer. Neither really is the problem about the FCA acting in good faith for their members. And I personally doubt that and suggest that is not even close to a possibility.
Whether FCA operates in good faith based on how they promote their role and who they represent is one question about its likelihood of truly appreciating good faith. The other is of course whether the disguise of its revenue streaming could become a little less hazy; perhaps a little more accessible. Yeah .. wright …
Some may even suggest that it would be nice to have the opportunity to really appreciate just exactly how FCA operates in relation to services provided and influential advantage taken. That would be incredibly great for membership I’m sure and ya never never know; I could join .. if they be havin me.
Good faith … Emerson should just do it. It ain’t gunna hurt that much and t’will give everyone some relief while franchisees work on exposing everything else. Does anyone really believe that an obligation to act in good faith is going to harm an industry … even in one state? Everyone please ... take the crash position ….
Outing franchisors that need to be outed will damage the industry? Fining aholes for being aholes is going to cause everyone pain? Oh Ye of little good faith ... Does everyone realize just how rediculously stupid to the point of almost insultingly funny the FCA and Emerson and Rudd excuses are?
Wright is making it up as he goes; Franchise Council opposed to revamp
Quality South Australian franchise systems will not be overly concerned at the Bill. Those that will be were probably mentioned in the State and Federal Inquiries.
The only step backwards here is to some basic responsibility to blackball bad guys at a State level when Canberra refuses to. Again Wright is saying franchising will suffer if he loses his bad guy mates.
Could someone try and explain to me how 'acting in good faith' increases costs? They say it is already implied and yet ignore it!
Are we talking monetary or personal cost?
Does It pain the FCA and rogue franchisors that much to tell the truth does it?
Some SA franchisor was rabbitting on in an interview with 'Smart Company' about too much 'red tape' to tow the FCA line. Surely the likes of Mr Giles have pointed out that 'technical breaches' mean diddly squat.
I really wonder if Mr Wright has any idea how wrong he really is? Glad I don't have to make a living out of lying and brown nosing. Aren't they happy enough to have the Minsters ear? They're already protected!
Definitely an exception to the rule, where many many wrongs, do make a Wright
A fisherman friend has suggested that FCA be reminded that all Australian States work quite well under differing Court systems and Laws presently.
None of the argument against the existence of better Law in one State as opposed to another holds water as a 'step back'. It does strongly prompt the missing step forward from the federal govenrment.
Mr Piccolo has stated very clearly that this Bill is the beginning of SA debate. FCA has not as yet offered anything substantive. Perhaps their intention is to pass on something of value should they decide to pass on funding to opponents of Mr Piccolo.
Mr Piccolo is obviously not about supporting anything that does not work for either franchisees or franchisors; rather, he just demands legislation and regulation that effectively makes life too difficult to abuse the franchise model. Anyone that bothered to read his submissions would appreciate that Mr Piccolo has greater faith in the strengths of franchising than does FCA or Mr Emerson.
Perhaps the FCA should have passed on recommendations of industry value to Minister Emerson and then Mr Piccolo would not be stuck having to do everyone else’s job in attempting to find a workable, effective solution.
For Australian readers contemplating what reform would work best to ensure a healthy industry for all participants the New Franchise Regulations in China are worth a read. They do raise some interesting questions. On first read most would suggest that franchisors would be performing harikari en masse [or at least the Chinese equivalent].
If there is to be a reform movement in China then it would likely be driven by howling franchisors and if all is even then they would probably gather in Tainan Square.
Will we see this level of regulation stunt franchising in China? Some might suggest that would be akin to suggesting that people will stop eating at McDonalds because it isn’t exactly a healthy diet [mostly].
Who would suggest that the small business model that is franchising can be harmed by effective or even tough regulation in the long term? Perhaps the Chinese have noted the national cost and the damage that franchising conflict causes and decided controlled clean growth is preferred? Perhaps the Minister in Beijing is an avid BMM reader?
Northern hemisphere readers may not be aware that the Prime Minister of Australia speaks fluent Mandarin. In fact, rumour has it that as a young child he was set adrift on the Yangtze River in a bamboo crib. Apparently as the peasant folk along the river came across the blond child with the cute smile and terrifying eyes they kicked the crib back into the river current.
Alas he drifted into Brisbane at the site that was to become a symbol of Australian Politics. The town folk at Luggage Point cheered for the little siht had arrived.
Steve Wright of FCA shame is either delusional or he believes that if you hold the same line often enough it becomes truth.
Apparently somehow missed that the only Federal Minister that rejected effective reform is the Small Business Minister. Plenty have come out to support the need for this level of change from Mr Piccolo but none other than Emerson have vocally supported the FCA line.
Compliance costs for healthy systems will be somewhere between minimal to virtually nothing.
The only franchisors that will be distressed and incur the potential new costs are involved in rogue practices that should cost them and they deserve to hit the ‘name and shame’ breach register. The only representative body that will actively lobby through false fear mongering has their and their parasitical associate’s revenue to protect.
The only politicians and journalist that would choose to believe the FCA misinformation machine and contend that they believe FCA’s desperate splutter would be those who really don’t know much about the reality of heinous franchising and don’t give a damn or they simply have friends in shonky places.
With the introduction of this Act the South Australian franchising landscape would be enhanced by more confident franchisee investors. Most franchisors are not stupid and know that confident investors are good for business.
If Mr Wright truly believes that franchising needs shonky operators to be efficient then he knows nothing about quality franchising.
is for real before you hold him up as a paragon and measure others negatively by comparison.
We have had our own Mr. Piccolo here in the USA, conducting hearings and espousing franchisee friendly imaginary policies like fair dealing and good faith and otrher such nonsensical notions - nonsensical because they never ever have effective support,
He sucked up some kudos from the downtrodden, spent at least two years jerking off and gave birth to nothing whatsoever. Only thing was that his name in the USA was LaFalce (how apprpopriate) (Come to think of it, Piccolo is Italian for little, isn't it?)
If Mr. Piccolo turns out to be the grenuine article in terms of his results, then he really will be a franchisee friendly paragon. If not, then he will be just another Mr. LaFalce.
So don't get all worked up like someone was about to give you a great Christmas free for nothing just out of the kindness of his little old pea pickin heart.
Inside secret - the LaFalce hearings in Congress here in the USA were instigated by the IFA, which was becoming fearful that franchisors were getting complacent and possibly taking the IFA for granted, thus threatening it's financial base. So the IFA needed a boogey man to scare franchisors into providing more financial support to fight off the threat of legislative inroads into their sanctuaries. It "arranged" for Congressman/Senator(I forget which) LaFalce to stage the LaFalce hearings farce looking to pass something called the Small Business Franchise Act.
Two years were wasted; the IFA regained importance in the greater scheme of things; and then, of course, the LaFalce committee failed to produce anything - thanks of course to the wonderful opposition staged in the farce by the IFA presentations. The Small Business Franchise Act remained a perverse sexual practice practiced upon franchisees from behind with little if any peripheral satisfaction.
Could that same farce be opening its own Act One in Australia directed by Mr. Piccolo?
Mary had a little lamb. Why?
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Mr Piccolo has been working his guts out behind the scenes and many in Australia know just how much effort he has put into this outside his seat and outside of his state to the point of travelling when he didn't need to so as to shore up support everywhere.
If he wasn't real he would not be going against his own party and sticking his neck out when the potential consequences are very real and he knows it. He is not about his kudos; this is about him putting his career on the line because he genuinely believes he has a moral obligation to. He has gone against his party's federal stance and the party could choose to Whack him for it; behind closed doors of course. But I understand where you are coming from and so would Mr Piccolo.
Many franchisees across Australia have spent a lot of time over the last couple of years trying to work out his angle and I did the same. He is after all a politician. The vast majority are now absolutley convinced he is the real thing and I get to know more than is published through people he has contact with. His has been an enormous effort. A little bit of Tony Piccolo research fills in the gaps as to the calibre of the man. He is a rare politician indeed but we have others of similar integrity. Tony Piccolo has put his on the table and I will bet mine on him. There is nothing to Whack here.
chosen a peaceful life where his constituency would already be well aware of his relentless efforts on their behalf in the seat of Light. For franchisees and franchising he has put a lot at stake but he obviously has support in the State of South Australia.
There are real people out there like you who do what they can because they see a need to do something meaningful rather than accept and ignore what is unacceptable and what cannot be ignored by people of integrity. Honest franchising in this country will see Mr Piccolo's efforts as a huge leap forward and all, including Mr Piccolo, accept there is no cure all.
The next question will be whether there are similar politicians in the other States. Western Australia understands the issues through their own Inquiry. They should no choose to take the gloves off. Queensland has seen David Gibson MP speak in parliament of the possibility of having to introduce State legislation. I'm not sure what has to happen in other States before politicians put people and bigger issues before party and a quiet life?
Renard Constructions (ME) Pty Ltd v Minister for Public Works - Priestley JA 1992) 26 NSWLR 234, at 268:
Parker, C; Lehmann Nielsen, V --- "What Do Australian Businesses Really Think of the ACCC, And Does It Matter?" [2007] UMelbLRS 7
They might also see the regulator as acting in a procedurally unfair way to the extent that they see a regulator focusing on unimportant issues, such as its own profile and publicity.
I dont think that MIGHT is the correct term, I think they DO is more correct. take a look at the last few months, a small zor cops it for making a tiny change that from what I can tell was fixed up anyway. The ACCC says its a "test case" and then there is the one where they are defending theor own name only. It would appear they are planning on letting a rogue zor do as he pleases, hurting others and the only thing the ACCC gives a dam about is how they look and caims made about them, what a joke.
and its credibility is now shot.
Effective federal regulation was always preferred by all including Mr Piccolo but in what was set to be the absence of anything even close to effective something had to happen. Is Griffith suggesting that a failed unified approach is preferred above all else simply because it is unified?
I would have thought that an academic institution professing to be in touch with the reality of franchising might see value in promoting harmonized State legislation across the country over nothing.
The ‘sector trend’ analyse referred to here is produced by Lorelle and is sponsored either directly or indirectly by the FCA and has historically been limited by sample size and the parameters for interpretation deeming it virtually useless. And that was accepted by the Committee for the federal franchising inquiry.
Lorelle’s opinion seems to be strangely out of step with the rest of academia and this statement is only barely associated in part with the obvious and previously expressed intent of Small Business Minister Craig Emerson.
The proposed South Australian legislation and Mr Piccolo will be heavily targeted by FCA coffers for at least the next 6 months. Misinformation, distortions and supposed ‘unbiased’ opinion will be published almost daily. Backroom pressure will be applied.
Money tends to usually win out when financial power is introduced to define ‘truth’ but in this case Mr Piccolo and the South Australia Act has committed support from every corner and at many levels and none will be backing off.
Do these people the write such tripe actually beleive what they are saying?
I suspect it is just a case of not wanting to bite the hands that feed.
Why is legal costs the argument trotted out all the time as a reason not to change?
It costs nothing to be honest and act fairly...that would be a great step in the right direction.
The laws are already there but it is the cost that presents the biggest barrier (along with a bumbling body called the ACCC). The FCA and rogue franchisors already have their bread buttered on both sides, with the ACCC completely ineffective, and franchisees unable to afford litigation.
Legal cost is certainly a valid argument, but not for an excuse not to change.
If the law was more accessible, you would see alot more litigation against these grubs, and they know it. Jim Penman even admitted it recently in an interview!!!
If South Australia get an accessible forum for conflict remedy then you will see far less conflict as those franchisors who behave badly learn to behave fairly and reasonably.
I have grave concerns that FCA’s Steve Wright has a debilitating health issue causing severe memory loss.
In the emailed ‘Message from Executive Director’ following and the linked media release we see the FCA vision of consequences of the SA Franchising Act 2009. This is FCA spin and interpretation based on distortion, exaggeration and omission. Repeated often enough and it is expected to become their truth.
The false fears raised have already been answered since they were anticipated by all and sundry. Everything FCA discharges in the open from now on is predicable.
Here is one omission. The FCA and the Federal Small Business Minister seem to have forgotten that there were 3 franchising Inquiries. All 3 painted an ugly franchising picture. All 3 tabled recommendations to address most of the key needs exposed in the Inquiries.
At a federal level they were mostly all rejected to produce nothing that will provide for a healthier industry with substantive regulatory ability.
I will say it again; there is no room for these bastards in franchising. FCA and the Minister obviously have no faith that franchising as a business model can exist without the rogue operators. Victims of deliberate scams are considered acceptable.
Here is Wright’s emailed Newsletter;
The reality is that the South Australian Franchising Act 2009 is the way forward for an industry that will otherwise continue to be plagued by damaging media coverage of the disasters that have continued since the 1970s.
With this Act South Australia would be set to deliver a greater level of investor confidence than any other State and that confidence means revenue to SA and decent franchisors will thrive there. Mr Wright suggests he can get SA Liberal support to oppose the Act. I doubt that very much.
Apart from the Minister and a small group of his apparently non-vocal supporters, politicians across Australia and from all sides are sick and tired of hearing disgusting stories of abuse and fraud from a constant flow of franchisee victims. I suppose some may be bullied.
There needs to be effective Law and regulation for franchising everywhere either by the hand of the federal government or if necessary from the States; 'anything less is contrary to prevailing community expectations.'
"The FCA made it clear to Mr Piccolo it would provide extensive background, information and compelling argument as to why it was opposed to his regressive proposal. Mr Piccolo decided not to wait for any such information. "
Probably because he and the rest of us already know the rubbish and paid for crap that would be put forward.
Face facts FCA and Mr Wright....franchising is flawed, and needs fixing!
that what we are dealing with is an upstart, self interested accessory targeting an elected parliamentary representative of the people with a record of great effort within his electorate and for any issue that sickens him while being prepared to put his personal brand and political life on the line for people he does not necessarily have to know and those he will never know.
Franchising.net.au
Who would wait to hear what FCA always has to say and in the end they cannot support their stance with anything other than theory and distortion. If FCA has anything else to offer why the hell has it not been tabled before this? Pray tell ….
If the FCA and the government want to distract from the weakness of their argument by targeting the man rather than the issues then they are seriously out of touch and franchisees across Australia appreciate how obviously fragile they must truly feel.
If FCA eventually decides to effectively target the issues than they should put up supportable evidence to back their constant and repeated, nonsense rhetoric.
Here I have to point out that I did in fact vote for Rudd-a-dud-du and in my State electorate I again voted Labor, again. There is no doubt that my local State representative does her job but the difference is that one is obviously driven to make a difference wherever the need, wherever it raises its ugly head and no potential personal consequences enter into decisions backed by a superior strength of character.
Here I have to point out that I have the faith and that includes that FCA income streaming will suffer within a healthy franchising environment. And that would mean that deterrent legislation such as the South Australian Franchising Act 2009 is doing its job to revisit a healthier franchising industry. Hallelujah!
I implore the FCA to fully put up any argument they have so it can be contemplated in public rather than behind closed doors.
It should never be forgotten that any compliance costs incurred within South Australia are the product of the failure of Mr Emerson. The issue is that effective reform determined by decades of Inquiries needs to now be put into federal legislation but it has been denied by the Rudd Government and Emerson.
The FCA consistenly presents a cost and litigation argument where explicit Good faith is a proposed avenue of reform yet also wields the old "good Faith already implied" argument as the needs arise to suggest that Franchise relationships are already governed by the concept.
I am yet to hear reasonable argument as to why the FCA considers explicit good faith to be more costly or less clear than the Implied provisions we have.
To the layman it seems like an S.A. State adoption of the franchise code into state law presents less of a barrier to legal recourse in the case of scamchising than the current federal provisions. I do not see any reasonable evidence to suggest that compliance will be more costly (for good franchise systems as opposed to scamchises) and or uncertain and therefore create a negative franchise climate in that state.
Conversely, I see a world economy that already realises it must understand and consider consumer and investor confidence and thus there is an opportunity to enhance the reputation of franchising in SA over and above other states.
I mean really- to argue that franchisors might be scared off for a "perceived" difficulty to franchise in S.A. without considering the enhanced levels of investor confidence in franchising that could be brought about by careful reform shows a failure of the big end of franchising to comprehend 21 st century conditions and is typical of the last centuries attitudes held by franchises and big business alike. When will good franchising realise that scamchising is undermining their market, their profits and their reputation at good franchising's expense and actually throw their support behind finding better ways to enhance the markets profits in the long term and drive out poor operators?
The next generation of investors is far more savvy when it comes to spurious marketing, armed with the ability to disseminate information between themselves freely via internet and social networks. The Franchise industry is kidding themselves if they think that future generations will be fooled by the same techniques used previously to lull franchise investors into a false sense of security. (Confidentiality agreements, disclosures, conquering by division, advertorials: I would argue scamchsiors survive due to a lack of information and that Capatilisms Market forces only "work" as economists propose they should where market information is freely variefiable - but I'll save that for another day)
This is why investor/market confidence is so important to the future of franchising. Fail to understand that and you may as well resign franchising to the investment scrap heap. It doesnt matter how good your franchise system- let enough scamchising happen and even the good ones will fail to sell or make profit- eventually.
It used to be too easy for scamchises to ride the backs of good franchising's reputation on the path to investors pockets but I think the times are changing. We are not there yet by any means- but franchises who stick their head in the sand and continue to think the future of franchising will be in the future as it has been in the past are deluding themselves and over time will discover just how detrimental to their own bottom line that their inaction can be.
There also seems to be little specific comment from the FCA as to the other parts of the Piccolo bill: that of the "commissioner" position, its powers to "publish" and it's potential to overcome "the current lack of reliable information reagrding franchise disputes (that) covers up the market failure that is occurring in the sector".
I do not believe that good franchisors with nothing to fear would see a commissioner with powers to publish realistic information as a negative thing. It should make a good franchise easier to sell over a scamchise- it directs the investment pool towards them rather than con jobs and makes for better franchising.
I define a good franchisor as one who is after mutual benefit. Zor makes money, zee makes money, we have our disagreements along the way but the ultimate aim is for mutual profit for an agreed proportion of cost and risk. The profits may not be completely equal but they are sufficient to make the costs of the enterprise worthwhile......for both parties.
While the current laws and structure make it too easy to benefit one above the other against the spirit that the contract was entered into the industry is doomed to fail.The only ones to benefit from the current status quo are big law firms like Deacons who supply the FCA with argument designed to perpetuate the dollars flowing from zors to law firms and anyone else who benefits from the current short sighted situation.
If state laws are what zors must comply with in the future after already rejecting a federal approach, I would say, thats is the cost of the resistance to federal law. You had your chance to make good franchising "cheaper" (if the argument can be believed that it costs more to do so) and you blew it.
Any increased costs attributed to different laws in SA are of FCA's own doing. I would be asking the FCA legal teams their motives in the vein of what Mr Solomon suggests with the La falce scenario but i would be asking it from the franchisor persepective in terms of Wright's arguments. Mostly I see the FCA as promoting the interests of supply industries, including but not limited to legal advice. I Don't see this as promoting the interestes of Good Franchisors any more than I can see it promoting the interestes of good franchisees.
( I have no evidence at all to suggest that Piccolo is of the same motive as la Falce.....Piccolos' actions show quite the opposite but that does not discount the idea that a "franchise friendly paragon" cannot be used unknowingly to further an associations' agenda. I am in agreement with Ray that Mr Piccolo has proved himself to be further above the usual parliamentray conduct level than most however).
Conspiracy theorists could argue that differing laws between states would increase the profits of franchisor legal advisors, if reforms are watered down to provide no real increase in liability but still provide for an increase in compliance fear- an actual increase in perception of liability and consequently in preventative legal costs.
That's the essence of FCA argument is it not? That they agree and they disagree? and thus perpetuate fear and myth to encourage greater spending by a franchisor on their legal budget?
Either way....this little "franchisex" would like to register their approval of Mr Piccolo and their applause of anyone who seeks to make franchising economical in the long term rather than the short term ( that age old problem that the climate chancge debate highlights so well) and profitable for both parties in what, I believe is the essence of good franchising- mutual benefit.
( not necessarily equal benefit but an agreed to proportion of benefit)
Mr Piccolo needs to be commended upon his arguments, that he tabled his legislation and admitted that one of the purposes behind doing this was to maintain debate and the importance of the topic.
Mr Piccolo demonstrates, hopefully, the example of democracy at work, but at the very least has raged.
"raged against the dying of the light."(Dylan Thomas)
that many times in the past and it has usually been delightful. How do y'all do it in Australia? Do you go out to dinner first?
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
i got wined and dined and flown around the country before I signed.... not just a dinner :)
the Latin breakdown begins with 'franchi' as in there are no free meals buddy. The process provides for selection and then you are in business. It is pointless to consider assignment fees when end of term costs are potentially so great. The Australian Latin interpretation of 'sex' suggests it refers somehow to uncontrolled amounts of alcohol to possibly make both you and I look pretty.
does my being evil relate to this thread?
I ought to get excellent grades for not raining on your Piccolo parade. Enjoy it while it lasts. At your age and with your experience, I expected less optimism.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
and we all accept that the cuddly lady is a long way from a song.
I thought that the FCA was there to represent both sides, the franchiswhore and the franchisee. If this is the case the FCA should be able to produce figures showing how many on both sides agree with there anti good faith stance.
I would be quite interested to hear if they have ever polled any franchisees on any matter. My opinion would be unless they can show the figures and prove that they are actually representing anyone they should just fade out and stop interferring where thay have no rights.
I approcahed the FCA with a complaint about my zor, they were not interested and I would say they certainly lead me to believe it was a waste and they were nothing. I can show them how my zor breached almost all of their poilicy/codes. Their repsonse was to ignore it, and comments were, "we are unable to enforce any action all we can do is revokes the membership. a few years on and I know of a couple of other people that have aproached the FCA and the franchisor is still a member.
They represent those which are majority membership which is the zors.
Anyone that submits a complaint to the FCA should know that if their franchisor is an FCA contributor or favoured for their potential to be a contributor then most of us that have been around for awhile suspect your complaint is in the hands of your franchisor within 5 minutes of receipt. We don’t know for sure. There just seems to be world of consistent coincidence around such complaints. But who knows ….
FCA recently and thoroughly surveyed ¾ of a percent of Australian franchisees carefully selected by their franchisors to ensure their total impartiality and they ensured the results were published by an associate rather than have the data somehow construed as possibly biased. That ridiculous rubbish is good enough for Emerson. When you ensure you have nothing else to work with then you have the basis to manipulate the outcome.
The problem for FCA and Emerson isn’t that people are more educated about the franchising review charade this time around. Their real problem is that they continue to believe the current level of outrage will all just fade away as it has in the past.
Forget the pathetically obvious industry and government lies, forget the submissions to and opinions of 35 years of Inquiries, forget the most recent, forget the years of unanswered ACCC complaints, forget the FCA, forget those who were scammed and those who successfully and constantly screwed new victims for years. Forget your political/financial conspiracy theories. Forget that you are expected to just walk away. Forget the next generations of screwed, conned and abused franchisees.
Like freakin hell … this is the era of the internet and unlike what was achievable by previous generations there is now a large hole in the side of scam franchising and that is the incentive and that is where truth lives.
Ray are you trying to tell me that the FCA actually paid someone to do a survey of less than one percent?
How could anyone veiw the results of that and conclude that the FCA is serious?
If that is the kind of shoddy workmanship that they are putting out I think that the goverments ( both fed and state ) should either ignore them or recognise that they are a body whose only interests are with the franchisors.
they prefer franchising surveys to be ‘independently’ sourced and then they select what bits they like. Every year there is ‘research’. Now the government is not paying for it although the ACCC ‘from time to time’ [rarely] throw $2 at something they need within parameters of research they set. But who do you think instigates the rest …
The 10 Thousand Feet survey admits it involved 550 [selected] franchisees. Depending on who you want to believe there are said to be between 60,000 and 65,000 franchisees in Australia. Do the math ... ave. ... .88% [OK; I was out a tad].
I also recieved this email, I responded to it and did not hold back. This is rediculous that a man in his position could want to oppose an obvious improvement to a system that is destructive to so many families around Australia. I hope his friends in parliment see what a disgrace Steve Wright is.
that I blew in the previous comment - Media Release
Steve Wright virtually suggests South Australia isn’t an important market and the next he blusters away as if someone was stealing his friend. But it seems SA is gearing up: Building a bigger state
The South Australian Parliament has 69 members of which there are 36 ALP, 22 Liberal, 7 Independent, 2 Family First, 1 Green and 1National. Franchising reform has broad bi-partisan support at federal level and for good reason. From all reports it appears that many South Australian politicians have similar standards, and for good reason.
FCA are pushing 2 issues; 1) Franchisors will be frightened off and, 2) the cost of compliance. If that is all they have then they will have to spend up big to shut this legislation down.
The evidence is that Franchising does prosper in US States where a variety of legislation attempts to produce a healthier environment although the same ‘fear’ was vigorously used by similar representative bodies as new/better legislation was introduced. There is no basis to suggest South Australian franchising would be negatively affected and there is the solid argument that the proposed legislation will create greater franchisee investor confidence.
The Cost of Compliance will only really affect rogue operators. The minimal cost to quality franchisors would be offset by the value of giving franchisee investors a greater ability to determine which are the better franchise systems in a state where such investors would rightfully have greater confidence. Mr wright should possibly point to those franchisors he believes will incur greater compliance costs.
So why is the FCA upset? It all boils down to the potential for this legislation and far better regulation to dramatically reduce conflict and they do not want such an example set. This legislation’s deterrent value is enormous.
FCA’s most important associates, including Deacons and the many other associate lawyers and the many ‘consultants’, are those who prosper from either the franchisor fear of conflict or the reality of conflict. These are multi-million dollar elements of franchising and FCA will be spending to protect their associate’s revenue [they gladly pay for it anyway].
If effective legislation and regulation were to catch on producing a lessening of conflict the FCA would lose quite a degree of the relevance they base the Council on and they would they be forced to value add for franchisors if they wanted to keep their hands in the franchisor’s pockets. But such value adding would never be as lucrative as conflict.
If Mr Emerson seriously does not want State legislation then why the hell does the stubborn SOB allow the FCA to back him into a corner where the winners are the few who least deserve to operate in the franchising industry and the losers are the people of Australia. He should go back to square 1 and read the submissions and recommendations from the current set of 3 Inquiries and then have a quick read of the previous sets of Inquiries in the 90s, 80s and 70s.
I believe this line has been pushed everywhere in the world when any Law reform is mentioned;
The fear mongers are out …. freaking out …
So South Australia becomes a 'no-go' zone because franchisors are required to abide by the law and act in 'good faith'?
What does that really say about franchising Mr Wright?
I would say there is something very wrong Mr Wright!
what exactly is the FCA saying... That franchisors are incapabale of acting in good faith. I certainly know mine was, I cant wait to see what happens should he piss of one of his SA fracnhisees.
The Act will do much to give better transparency to an industry that needs it. Good franchise models will stand out.
In my opinion the critical element in the Act is the deterrent value. Good franchising won't have a problem and I honestly believe that industry growth, economic contribution and investor profits in this industry is an industry dynamic that will never be restrained because there was never any room for the bastards anyway.
There was never anything wrong with the franchise model. It was so good it attracted anyone and when anyone had money and no humanity the model became tainted because so many suckers exist.
Because there is virtually no effective Law the bastards arrived in droves and they were able to continually refine how they enticed and screwed suckers.
Good franchise models will stand out. Many will clean up. And the rest get what honest government prescribes.
Of great importance is the call from Mr Piccolo to other States. He wants them to work together to produce better franchising and to deal with the obligations of government to act when something is so bloody wrong.
Australian franchisees should feel free to drop their local State representatives a line.
Would I like more … Of Course! I suspect we will have to see where this goes but one day we may also accept the need to have system financial performance data available in disclosure.
The key to the Act is the role of the Commissioner. That role is what would make it or break it. The ACCC has failed to fulfill its role for the many reasons published over many years.
The problem as I see it is that the FCA is going to get increasingly unhappy. Mr Emerson will be peeved. Will they get nasty? Wait for the 'dirty tricks'.
For those who have not read the Act; I suggest you do. And Hansard is a hoot.
And by the way ... Mr Wright either cries out because he does not have any faith in the franchise model or a healthy industry with less conflict may not be what FCA would prefer. Its a dollar thing ....
still has to have an enforcement budget. Unfunded mandates spell the death of most good legislative enactments.
The commissioner who can't afford the fight is a commissioner in name only, entitled to be receive free drinks at Muldoons paid forbvy all the franchisors who benefit from his not having enough money to do anything.
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard,
Excellent point: without gas, any equity "vehicle" is just lipstick on a pig.
Public funding is out as it should be. Compulsory funding from the franchise industry, mandated legislatively may help via required insurance. Think of compulsory home/car/franchisee registration, premiums funding centralized franchise research, things like that.(CDN: 70,000 @ $100 annually submitted by ors is a start)
Reverse onus provision on good faith is the hammer.
Les Stewart MBA FranchiseFool :: WikidFranchise
Mr Wright is right on one thing; franchisors will be taking note.
There are franchise brands in South Australia that will look at the Act and know it will not greatly affect them even at $100,000 for a breach. They would be confident that this reform will not affect them except that it may well help them and not only where greater transparency allows them to be more easily recognized as a quality franchise product against noncompliant competitors, but also because confident franchisee investors mean growth.
As far as Wright suggesting South Australia would be a ‘no go’ for franchisors he forgets to mention that prospective South Australian franchisees under this legislation would be entitled to have a lot more confidence than franchisees anywhere else in the country. If the market attracts confident investors then the franchisors will be there.
If the Act goes through then we would see some franchisors pulling out calculators and working out why and then how to avoid the potential for high, continuing but avoidable cost.
The Commissioner must be adequately funded to minimize the cost. In early days I can think of a few franchisors that could potentially fund the Commission for 10 years a piece but Les is right and industries typically fund regulation. I don’t see the SA overhead as more than a cost to doing business and the cost can be minimized in a compliant investor confident sector where that cost becomes and investment with a return.
Mr Piccolo hopes to keep his seat at the next election. I doubt he would have a problem retaining his constituents given his easily found work ethic for his Light community and with regard to franchising, his determination to follow through in what began there.
His reasoned understanding of franchising found him needing to make a positive difference to the lives of people that live outside his seat and outside of his State. He has shown some serious guts in his pursuit of a ‘fair go’ for the underdog franchisee and he works hard so how could you not vote for him. I suspect every franchisee in the country would want to.
Mr Emerson on the other hand left his mettle at the door when he closed out dealing with some of the most critical franchising needs. How could voters in Rankin trust him when he so stubbornly refuses to even attempt to effectively deal with such blatant wrong?