Sherry warns states against franchising laws, flags bigger role for Small Business Advisory Committee

Small Business Minister Nick Sherry has warned South Australia and Western Australia against introducing state-wide franchising laws in addition to existing federal laws, and flagged the Small Business Advisory Committee will be encouraged to advise the Government on small business reforms and challenges.

Sherry told SmartCompany this morning that from November, the Small Business Advisory Council would provide the Government with “an additional source of independent expert advice regarding small business policy issues, trends and red-tape reforms.”

“The most significant change is that the Committee members will now be able to provide advice throughout the small business policy development cycle, from beginning to end.”

The Small Business Advisory Council was set up in June last year to review and provide advice on regulatory proposals that have a “significant impact on small business.” Its nine members include Gary Black of the National Retail Association, Greg Evans of the Australian Chamber of Commerce and Industry, Robert Powell of BDO Australia and Michael King of Kings Australia.

In a transcript of an address to the national franchising convention yesterday, Sherry also ruled out a review of the Franchising Code of Conduct before 2013, saying more time was needed to review recent amendments to the code.

Speaking in Melbourne, Sherry said the Federal Government “stands firmly behind a national approach to franchising”, welcoming a finding by a Western Australian parliamentary committee that “franchising is best regulated at the Commonwealth level.”

“I’ve raised this point on several occasions, and once again refer to the intention of South Australia and Western Australia to consider their own franchising legislation,” Sherry said. The South Australian lower house has passed a commissioner’s bill, but the legislation is yet to pass the upper house.

“The proposed state bills may impact on, or duplicate, the Commonwealth franchising regulations,” Sherry said.

“After 110 years of Federation, I find it strange states still believe there’s mileage in trying to go it alone when there’s so much more benefit in the national approach to law making.”

“Cross-border differences are the reason the Council of Australian Governments adopted its reform program under the Partnership Agreement to deliver a Seamless National Economy.”

“I know national franchises won’t be impressed if they have to run the gauntlet of state business regimes to operate in either South Australia or Western Australia.”

“This also flies in the face of significant progress to date to COAG’s seamless national economy agenda.”

Drawing attention to tougher penalties for unconscionable conduct or false or misleading representations of $1.1 million for corporations and $220,000 for individuals, Sherry also said parliament was “also considering inserting interpretative principles into the unconscionable conduct provisions of the Australian Consumer Law.”

“These amendments will assist business, the courts and consumers to understand the intention of the Parliament when applying the prohibition against unconscionable conduct,” Sherry said.

He also said that the Government-funded Office of the Franchising Mediation Adviser, which provides free dispute resolution services to business operating under the franchising code, has had a 75% success rate.

Shadow Small Business Minister Bruce Billson told SmartCompany this afternoon that there was no evidence that changes to the Small Business Advisory Council would lead to greater emphasis on SMEs from the Govenrment.

“The track record is appalling; there’s no evidence that any tinkering with advisory committee roles and membership will have no impact whatsoever,” Billson says.

On Sherry ruling out a review of the Franchising Code of Conduct, Billson says concerns about the franchising sector ought to be heeded.

“There are opportunities to improve the code,” Billson says. “I understand there is a debate about what would be the best changes, and that’s a debate worth having.”

Billson describes franchising bills in SA and WA as a “sub-optimal” result, but says the states’ moves are a reflection of flaws with the existing federal system.

Meanwhile, the Franchising Council of Australia yesterday reiterated that the SA legislation was “out of step” with other small business commissioners across the country, and unnecessary given a “comprehensive national regime already exists.”

“The FCA has called on the upper house of the SA Parliament to either create an enquiry to give the bill a thorough examination or to amend it to prevent it from interfering with existing national laws.”