South Australia MP Tony Piccolo slams Federal Government franchising reforms

South Australian Labor MP and franchisee advocate Tony Piccolo has slammed the reforms to the franchising code unveiled by Federal Small Business Minister Craig Emerson last week and will push ahead with plans to introduce his own laws to make franchising “fairer and more competitive”.

Piccolo says that while the changes are welcome they are “significantly inadequate”.

In early November, Emerson unveiled a number changes to the Franchising Code, including increased disclosure requirements for franchisors (particularly around what happens when a franchise agreement comes to an end) and greater powers for the Australian Competition and Consumer Commission, including the power to conduct random audits of franchisors and name and shame rogues.
Piccolo is less than impressed.

“The changes rely heavily on the ACCC taking on a more proactive and interventionist role. This hasn’t happened to date and there is no evidence to suggest that this would improve in the future,” he says.

“The random audits sound like a good idea, but they should be happening already and will add little to the compliance strategy. Proposed public warnings are desirable, but it is a case of acting after the horse has already bolted,” warns Mr Piccolo.

Piccolo now plans to push ahead with the introduction of a private members bill designed to strengthen South Australia’s franchising laws.

He says the legislation is currently being drafted and will soon be taken to the Labor caucus before being introduced on 1 December. Piccolo is hopeful the bill will pass early in the New Year and says he has the in-principle support of the South Australian Liberal Opposition.

Piccolo’s bill will focus on the introduction of a controversial “good faith” clause into the Code, improved dispute resolution processes and tougher penalties for breaches of the Code.

The bill will essentially incorporate the existing Franchising Code (which is Federal law) into South Australian law, to ensure that the state and federal laws can operate together.

“I hope in the meantime the Emerson will review his position. I’ll certainly be sending him a copy of my draft bill,” Piccolo says.

He admits it is a “second-best” solution but says he must act given the problems he is seeing in the sector.
“Yesterday I had this lady on the phone crying to me, she’s lost her house and her car, and that’s because a franchise has fallen over and franchisor has taken her down.”

“It’s only the tail end which is a problem, but that tail end is causing havoc.”