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A fair go for franchisees

We were pleased to see that the report Fairness in Franchising, released on 14 March 2019, highlights our concerns around the imbalance of power in the current Australian franchisor/franchisee relationship.

Franchising is a big part of the Australian economy, and contributes around nine per cent to our gross domestic product (GDP). It is also a popular and important entry point for people wanting to run their own business. However, the current imbalance of power can sometimes lead to abuses and misconduct.

High profile problems have regularly plague the sector, and this led to the establishment of an inquiry by the Federal Parliamentary Joint Committee on Corporations and Financial Services into the effectiveness and operation of the Franchising Code of Conduct.

The long-awaited report makes 71 recommendations to help address the power disparity between franchisor and franchisee. Key findings include the need to develop greater transparency and accountability, fairness and protection, and education and awareness.

The report also called on the government to establish a Franchising Taskforce to examine and implement its recommendations. This should be made up of representatives from Federal Government, including the Treasury, Department of Jobs and Small Business, and Australian Competition and Consumer Commission.

Our team at the SBDC has long advocated on franchising policy through contributions to myriad state and federal government, and parliamentary inquiries and reviews into the Code and the sector over at least the past decade.

We also contributed to this inquiry to highlight our concerns about the lack of protection for franchisees under the current Code of Conduct. I welcome the report’s recommendations as a positive steps towards enhancing confidence in the Australian franchising sector and promoting the mutual benefits of the franchisor-franchisee partnership.

For more information

The SBDC is here to assist with any issues WA franchisees may have. For more information on starting your own franchised business, read 7 things to investigate before you buy a franchise or for general guidance contact our free small business advisory service.

You can view the full Fairness in Franchising report here.

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