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Franchise Council Annoys Shopping Centre Council

Lease AbuseA foolish claim made earlier this week by Franchise Council of Australia that the Shopping Centre Council of Australia might be ready for a voluntary Code of Conduct on retail tenancies was meant to gain some much needed credibility but it backfired.

FCA executive director Steve Wright says a voluntary code for landlords, tenants or representative organisations has been drafted to address member concerns over the "extreme behaviour that occurs far too frequently".

These include:

  • Excessive rental increases in major shopping centres.
  • Unreasonable behaviour in relation to end of term arrangements for sitting tenants.
  • Unreasonable and costly requirements in relation to shop fit-out and signage.
  • The substantial information imbalance between landlords and tenants.
  • Abuse of market power where landlords offer contracts on a "take it or leave it" basis.

The Shopping Centre Council of Australia didn’t take too kindly to the FCA report inferring desperate tactics over WA & SA State legislation;

He suggests FCA's push for a code of conduct has been driven by a desire to deflect from recent problems in the franchising industry.

"It's a common tactic under the FCA that when they're in trouble they'll attempt to divert attention," Cockburn says.

Cockburn also says that tenants would be better placed if the FCA was willing to slice fees. “Given the franchise fees, it's no wonder some are struggling.”   SmartCompany

These two lobbyist Councils have had an on again-off again relationship for a number of years depending on whether there was a mutual benefit but on every occasion it was the small business operator, including franchisees who were targeted as the designated losers.

InJanuary 2011 the SCC submission to WA Economics and Industry Committee supported the FCA call to shut down Western Australian franchising legislation;

The introduction of a general duty of 'good faith', defined in a much broader fashion than courts have previously done, will put the conduct of many business affairs in the hands of the judiciary.

In the SCC 2007 submission to the Australian Productivity Commission:

While the FCA is very voluble on the subject of rents and rent increases, arguing for additional regulation, it remains remarkably silent on the subject of the level of franchise fees and whether there is a need for regulation of these fees.

It is also a strong opponent of legislation regulating the franchise-franchisee relationship, relying instead on a code of practice, which provides franchisees with nowhere near the same level of protection as lessees receive under retail tenancy legislation.

The problem facing the FCA is that the SCC has a much larger lobbying budgetrepresenting AMP Capital Investãrs, Brookfield Multiplex, Centro Properties Group, Charter Hall Retail REIT, Colonial First State Property, Dexus Property Group, Eureka Funds Management, GpT Group, ISPT, Jen Retail Properties, Jones Lang LaSalle, Lend Lease Retail, McConaghy Group, McConaghy Properties, Mirvac, Perron Group, Precision Group, QIC, Savills, Stockland and the Westfield Group.

The problem facing minnow franchisees without any lobbying budget is that the FCA and SCC lobbying budgets have influenced Australian federal policy and no matter how obvious was the abuse of the little folk. Thankfully the States look like taking up the Federal slack.

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About Ray Borradale

Ray Borradale's picture

Public Profile

Over forty years experience in Small Business and more than twenty-five years in franchising operations as a franchisee and employed by three franchisors, mostly in operations.

I have dedicated more than ten years and over 15,000 hours in the pursuit of quality franchising and exposing franchisor abuse of franchisees while advocating for the introduction of franchise relationship Law and the levelling of the dispute processes between bigger business and small business.

Contact: rayborradale@yahoo.com.au

Area of Interest
Franchise Operations