Majority of WA franchise inquiry submissions oppose legislation

An initial review of submissions to the Western Australian supplementary franchise inquiry reveals that the majority of submitters, including many franchisees, are opposed to the controversial proposal to regulate franchising in WA.

Of the 114 submissions available on the website of the WA Economics and Industry Committee which is conducting the inquiry into a private member’s bill tabled by Southern River MP Peter Abetz last year, just 15 indicate support for the bill[1].

However it is possible that some submissions may have been lodged in confidence, and therefore do not appear on the inquiry website for public access.

Of the 99 submissions which oppose the bill, half are from franchisors, while 22 are from franchisees, 15 are from lawyers and franchise consultants, six are from associations, three are from academics[2], three from government departments and one is from a potential franchisor which has cancelled its franchise growth plans in WA due to the proposed legislation.

Franchisors and franchisees who oppose the bill come from a variety of retail and service industries, and vary in size from small, localised businesses to national brands which are household names in their own right.

Associations have opposed the bill on a number of grounds, particularly in relation to key components such as the proposed definition of good faith, as well as its application to franchise agreements outside Western Australia, retrospective application and straightforward concerns that states should not create extra regulation in an area already regulated federally under the Franchising Code of Conduct.

These associations include the Franchise Council of Australia, the Law Council of Australia, the Law Societies of both Queensland and Western Australia, the Shopping Centre Council of Australia and the National Retailers Association.

Similar concerns as those expressed by the associations have also been noted in submissions from government departments, including the WA Department of Commerce, and the WA Small Business Development Corporation. Additionally, the commonwealth Department of Innovation has also lodged a submission outlining how the intent of the Abetz bill has already been addressed by recent changes to the Franchising Code of Conduct, as well as changes to the former Trade Practices Act which gives the Australian Competition and Consumer Commission (ACCC) greater powers to investigate and prosecute breaches of the Act and the Code.

Out of four submissions from academics, three oppose the bill. The remaining submission by University of New South Wales academic Frank Zumbo who drafted the WA bill and a similar one previously in South Australia, supported the bill.

Among the 15 submissions supporting the proposed bill include eight from current or former franchisees, two from franchisors, three from associations, one from a consultant and one from WA MP Don Randall, a parliamentary colleague of Peter Abetz.

The two franchisors who support the bill include the Jim’s Group (1 page submission by group founder Jim Penman) and Competitive Foods, the franchisor of Hungry Jacks and a multi-unit franchisee of KFC outlets in WA, which is currently in dispute with its franchisor over the renewal of the KFC franchise agreements.

Association submissions were received from the Franchisee Association of Australia Inc, the Retail Trader’s Association of WA, and the National Federation of Independent Business.

The average length of a submission is under seven pages, with 47 submissions of two pages or less.

The longest submission at 110 pages and which opposes the bill, was lodged by Quick Service Restaurant Holdings, a WA-based franchisor which is the parent company of fast food brands including Red Rooster, Chicken Treat, Oporto and Chooks.

The next longest submission at 84 pages was lodged by Competitive Foods and which supports the bill.

A number of submissions do not appear to have specifically addressed the terms of reference of the inquiry, but indicate support or opposition in principal to the proposed WA franchise bill. A small number of submissions have reused previous submissions to the 2008 federal franchising inquiry but do not address the current inquiry’s terms of reference.

The inquiry committee consists of five state MP’s, plus co-opted but non-voting member Peter Abetz, whose bill is the focus of the inquiry. Submissions to the inquiry closed in late January and a final report is due no later than May 26 this year.

Further information about the inquiry is available online by clicking here, then selecting “Inquiry into the Franchising Bill 2010” from the inquiry list.

Meanwhile a similar franchise inquiry in South Australia which closed for submissions late last month is yet to release submissions on its website.