WA franchising law advocates vow to fight on after committee rejects state laws

Western Australian Liberal MP Peter Abetz plans to push ahead with his private member’s bill to introduce state-specific franchise laws, despite a parliamentary committee finding they are unnecessary.

The committee yesterday found that existing federal laws, plus beefed-up powers for the Australian Competition and Consumer Commission, were sufficient to protect franchisees, following complaints they had been poorly treated by franchisors.

The report, which was not unanimous, said misconduct in franchising was not widespread.

“The committee has found that the amendments to the [Franchising] Code and the Competition and Consumer Act made over the last three years will address many of the problems cited in earlier inquiries, provide the ACCC with greater investigative and enforcement powers, and are intended to lift the standards of conduct in franchising,” the report said.

“Importantly, these have been undertaken within the existing national regulatory framework that is well-suited to franchising. The federal government has confirmed it will review the adequacy of these amendments in 2013.

“Given the significance of these amendments, and the importance of uniform legislation [in] easing the cost and compliance burden for small businesses, the committee is not convinced that the bill is an appropriate measure at this time. Hence, it has recommended that the bill be opposed.”

The report also questioned supporters’ arguments that the bill would attract franchise investment to the state and would not lift compliance costs. 

The bill – which called for penalties for breaches to the Franchising Code of Conduct, and a statutory definition of ‘good faith’ in contracts – was sent to the Economics and Industry standing committee last year after the Liberal Government refused to endorse it outright.

It has support from the Labor opposition, but would require support from the Nationals, the Greens and independents MPs to pass.

Franchise Council of Australia executive director Steve Wright said the parliamentary committee did a thorough investigation and said the outcome was “fairly clear”.

“What Abetz decides to do is up to him, but I think if he was to contemplate putting up the same bill, he’ll get the same reaction,” Wright said this morning.

But associate professor Frank Zumbo, of the University of New South Wales, says the franchising bill “lives to fight another day”, and has called on non-Liberal MPs to pass the bill.

Zumbo, who drafted the bill, says some franchisors are not complying fully with the franchising code, undermining confidence in the West Australian franchising sector.

According to Zumbo, increased powers for the ACCC were well and good, but if the competition regulator didn’t crack down on breaches, the states needed to step in.