Abetz says support unaffected for WA franchise bill, despite lukewarm support from parliamentary inquiry

Western Australian Liberal MP Peter Abetz says support for his private member’s bill to introduce state-specific franchising laws has not wavered, despite a parliamentary inquiry finding that misconduct in franchising is not widespread and amendments to existing regulations will lift standards of conduct.

“I have done some ringing around today, and it seems that the support for the Bill has been unaffected by the report,” Abetz told SmartCompany.

“No one disputes that reform of franchising is best done at the Federal level,” Abetz said. “However, what the majority report failed to recognise is that the quickest way to achieve Federal action is for West Australia to move the Franchising Bill 2010 through the state parliament.”

“Given that the South Australian Government has committed to introducing similar legislation, and moves are afoot for private members bills in New South Wales and Queensland, it will put enormous pressure on the Federal Labor Government to act to implement what it promised to do during the 2007 election, but so far has failed to deliver.”

The bill – which calls for penalties for breaches to the Franchising Code of Conduct, and a statutory definition of ‘good faith’ in contracts – has support from the Labor opposition, but would require support from the Nationals, the Greens, and independents MPs to pass.

A parliamentary inquiry last week said that “amendments to the Franchising Code and the Competition and Consumer Act over the last three years will address many of the problems cited in earlier inquiries, provide the ACCC [Australian Competition and Consumer Commission] with greater investigative and enforcement powers, and are intended to lift the standards of conduct in franchising.”

“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.”

Abetz says not only is the state bill legally valid, but notes comments from Daryl Williams QC that it “fills a gap in the Franchising Code of Conduct by affording a measure of protection to franchisees and thereby addressing the disparity in power between franchisors and franchisees, as well as providing specific forms of relief appropriate to the franchising industry.”

Abetz also rejected the inquiry’s concerns over costs, saying large franchisors who have a reputation for acting ethically submitted it would not cost them one cent, because they already adhere to the Franchising Code of Conduct and act in good faith.

“Several other franchisors claimed it would increase their risk, as franchisees might take them to court!” he wrote.

Abetz also rejected forecasts from the Commissioner for Consumer Affairs that 22 prosecutions would be launched each year, costing $1.2 million per year.

“This sum does not take into account revenue from fines, nor from legal costs being awarded against the defendants,” Abetz said.

“Given that the Department claims that abuses in franchising are not widespread, supporters of the Bill are a little puzzled why it believes it will be prosecuting 22 cases a year! I would think that 6 or so cases a year would be adequate to send the message that the law needs to be obeyed.”

But the Franchising Council of Australia, which represents both franchisees and franchisors, has said the parliamentary committee conducted a thorough investigation and the outcome was “fairly clear.”