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Wounded Australian Franchisees Fed Up

CANBERRA -  Franchising was up for heated discussion yet again in Australia's federal parliament Monday night. The Minister for Small Business, Craig Emerson, was missing.

That in itself was not unusual but there to defend and deflect was Mark Dreyfus, the government’s member for Isaacs.  The performance, or more accurately, the non-performance, of Emerson was always going to be difficult to defend and to his credit Dreyfus made some relevant points.

It is debatable whether the discussion of the Hon Don Randall’s motion held greater weight in its push to implement the recommendations from the 2008 Federal Inquiry into Australia’s booming scam franchising industry or whether the point was the failures of Minister Emerson.  A full extract from Hansard is attached below this article.

Don Randall, member for Canning, moved that the House:

condemns the Minister for Small Business for ignoring the calls of current and former franchisees, the Opposition and his own colleagues to urgently implement the recommendations'

Mark Dreyfus concedes:

Every member of this parliament would have received, I would be certain, complaints from people involved in franchising in their electorate offices and those complaints would possibly have been in respect of some very large franchise systems and possibly in respect of some quite small franchise systems.'

Dreyfus’ defence of government inaction can be summarised in a suggestion that because scam franchising has been rampant for decades [first reported in 1976] there is no great need for urgency and every government since should shoulder some responsibility.  What the hell that has got to do with delivering or avoiding a solution I am yet to fathom.

Joanna Gash responded:

'I do not care who was in government. It is now the Labor government, so let us get on with fixing the problem.  We are looking for leadership on this issue but all we are finding is silence from Minister Emerson. It is not only the opposition calling for urgent action; members on the government side are also callingfor action. Franchising transcends political boundaries.'

Bernie Ripoll chaired the original Federal Inquiry and while he defended the slow progress from the Minister’s office he stood behind the need for the reform that the Minister has ignored and questioned:  

The committee was very conscious of the need to make good, sound, solid recommendations, because we all understood the need to get the right balance between regulation—and the cost of regulation—and allowing franchisees and franchisors to go about their own business, to follow the terms and agreements within their own contracts. We all support that but there is abuse in the sector by some and that needs to be dealt with.

Lets be fair here; Emerson cannot win no matter what he does.  He is driven by ego and the influence of his mates at the Franchise Council of Australia.  Both have been challenged. Emerson’s performance to date has been one of a child given the ultimate power to make a decision and he is enjoying that power. His frustration comes at two levels. 

He is well aware that he is incapable of delivering a satisfactory solution to the problems facing franchising.  Franchisees generally expect little from Emerson and he is well aware that once he finally tells the world of his momentous new action plan franchisees will scream long and loud.  He will give franchisees crumbs and then the FCA will put on their show of outrage claiming he has gone too far.

Emerson is playing at minimising his fallout rather than to seriously address the damage facing the franchising industry and it appears he could not care less about ‘mum and dad’ investors.

Chalpat Sonti reporting for Fairfax this week:

'Dr Emerson has met with franchisor representative group the Franchise Council of Australia, but not with franchisees, in the wake of the report. That has led franchisees, who are not represented by a group of their own, to fear Dr Emerson will water down or discard…'

Australian franchisees are now looking to State representatives of the calibre of Tony Piccolo [South Australia] and David Gibson [Queensland] to ignite the franchising debate at State level. Perhaps State governments are needed to deliver quality in franchisee protection while Federal political point scoring delivers nothing.

Most in Australian politics seem to have forgotten this is about an environment that delivers protection for rogue franchisors who rip off the little folk and destroy generations of families.  Franchising reform requires balance but that balance cannot continue to allow governments to ignore the abuses and the consequences of legislation and regulation that fails.

Franchising - Hansard 17 August 2009 [PDF 184kb].pdf181.32 KB
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