QLD next for franchise legislation

Another proposal for state-based legislation for franchising is likely to be tabled next year, following the announcement last week by a Queensland MP that he intends to present a private member’s bill to further regulate the sector.

The Liberal National Party member for Gympie and former newspaper editor, David Gibson, announced in Queensland Parliament last Thursday (November 25) that he will introduce a bill in the new year after consulting with “all stakeholders”. 

The bill will make Queensland the third state to have tabled franchise legislation after South Australia and Western Australia, and the first state where a proponent of such a bill comes from the state opposition, and not government.

In South Australia, Labor MP and Member for Light Tony Piccolo proposed a private member’s bill in December 2009, which lapsed following a state election in March in which the ALP retained government.

Western Australia has also had a franchising bill tabled, but again as a private member’s bill.

Peter Abetz, the Liberal MP for the state seat of Southern River, tabled a private member’s bill in October this year, which was openly supported by the state opposition, but recently delegated to the WA Economics and Industry standing committee before going to a second reading.

In raising the prospect of the Queensland bill, Gibson noted the proposals for franchise legislation in SA and WA, but suggested that a more moderate approach would be required for Queensland, focused largely on low-cost and rapid resolution for franchise disputes via the Queensland Civil and Administrative Tribunal (QCAT).

In his speech to QLD Parliament on November 25, Gibson did not make reference to some of the more contentious elements of the SA and WA proposals to date, including a definition of good faith, court-ordered franchise renewals, and damage claims for parties unrelated to a franchise agreement.

He did however reference a speech he made to QLD Parliament in June 2009, in which he advocated the extension of QCAT’s jurisdiction to include franchising disputes, noting that tribunals are often “quicker and cheaper than civil courts”. 

Gibson suggests that expanding the existing QCAT system to include franchise disputes is complementary to the tribunal’s current role in managing commercial and retail leasing disputes, and that an improved dispute resolution system would give people more confidence to invest in franchising.

No timeframe for the tabling of the QLD Bill has been proposed (other than 2011), and as a private member’s bill, it remains to be seen if it will be supported by the QLD LNP, or if the QLD Labor government will support it on party lines like the ALP has with franchising bills in SA and WA.

SA appoints steering committee and advisor 

Since Tony Piccolo’s December 2009 private member’s bill, SA Business Minister Tom Koutsantonis announced in October this year that SA would proceed with its own laws for franchising, and that a draft bill would be released for public comment before the end of this year.

In making his announcement at the time, Koutsantonis acknowledged Piccolo for his original bill, and indicated that it would provide substantial inspiration for the draft laws to follow.

On November 24, the Business Minister announced the formation of a high-level steering committee to draft laws for the creation of a Small Business Commissioner and the regulation of franchising.

However the statement did not name any of the committee members, other than to say that the committee will be advised by University of New South Wales academic Frank Zumbo and include “…senior government officials from agencies directly involved in matters affecting small business on a daily basis”. The statement also did not indicate if there will be any public consultation in the steering committee’s deliberations.  Read the Minister’s statement here.

WA Bill goes to Economics & Industry committee; Abetz co-opted

In WA Parliament last week, franchise bill proponent Peter Abetz was co-opted to the Economics and Industry standing committee (which will review his proposed bill) as a non-voting member following an amended motion to appoint him was tabled by the state opposition, according to Hansard reports.

In acknowledging the Abetz appointment, a government MP said that a precedent had already been set that the instigators of private member’s bills referred to a committee could participate in the committee, but were not able to vote due to their special interest in the subject at hand.

In a separate speech to WA Parliament on November 25 (the same day as Gibson’s announcement about a private bill for Queensland) Abetz rejected insinuations that he has a conflict of interest or a pecuniary interest in promoting his franchise bill, and that he had never received a donation of any kind requiring him to do a favour in return.

He also acknowledged that he had previously advised Parliament that one of his sons and the son’s wife own and operate two drive-through coffee franchises.

The Economics and Industry Committee are expected to complete their report into the proposed WA Bill by May 2011.

2011 to be a year of uncertainty for franchising

Despite one federal and two state franchise inquiries in 2008, the introduction of changes to the Franchising Code of Conduct on July 1 this year, and expanded powers for the Australian Competition and Consumer Commission (ACCC) to investigate and prosecute wrongdoing coming into affect on January 1 next year, the sector will face further uncertainty heading into 2011 with the prospect of differing legislation across three states.

How the sector will react to this uncertainty remains to be seen, but expectations are that confidence to grant franchises in the three states where legislation may be considered could be affected in the meantime.

Jason Gehrke is the director of the Franchise Advisory Centre and has been involved in franchising for nearly 20 years at franchisee, franchisor and advisor level.

He advises both potential and existing franchisors and franchisees, and conducts franchise education programs throughout Australia, and publishes Franchise News & Events, a fortnightly email news bulletin on franchising issues and trends.