Tuesday, June 25, 2024

Ombudsman welcomes franchising review and appointment of reviewer

The Australian Small Business and Family Enterprise Ombudsman Bruce Billson has welcomed the Australian Government’s announcement of a review of the effectiveness of the regulatory framework that underpins the positive commercial relationships, fair trade, confidence, and vitality in the Australian franchise economy.

The review, to be chaired by former ACCC Deputy Commissioner, Dr Michael Schaper, will look at the ‘general fitness’ of the Franchising Code; enforcement and dispute resolution mechanisms; the role of the Code in regulating the automotive sector; the impact of increased penalties; and the how the Code interacts with the Franchise Disclosure Register.

“Franchised business models enable a very significant contribution to the Australian economy, and franchising, when done well, can be a terrific mode of entrepreneurship,” Mr Billson said.

“The regulatory framework plays a vital role in supporting the informed commercial decision-making and the positive, mutually supportive relationships at the heart of successful franchising. And this review will help to ensure the framework is fit-for-purpose at this time of change and dynamism in the small business economy,” he said.

“It is also appropriate to check in on how more recent changes are operating, whether the disclosure ethos that underpins the Code is being fulfilled and compliance considerations for the duties and obligations the regulatory framework imposes.

“Dr Shaper is a wise selection as reviewer as he well understands how Codes can support fair commercial conduct and positive relationships, as well as how public policy and regulation can lay the ground for a business to compete, but not predicate whether a business is likely to enjoy success”.

Recent statistics published by the ASBFEO in relation to its mediation services and dispute resolution support function point to the importance of accessible and effective dispute resolution under the Franchising Code, with approximately 15% of all contacts made to the ASBFEO relating to franchising matters. Over the last 12 months alone, the ASBFEO has provided active case management over 150 disputes in its dispute resolution role under the Franchising Code, some involving multiple franchisees of a single franchise system.

The ABS reported 4.4% of Australia’s businesses were operated by franchisees in 2016-17. They are particularly common in retail trade, where 17.8% of businesses were operated by franchisees.

Retailers welcome review into Franchising Code of Conduct 

The Australian Retailers Association (ARA) has welcomed the Federal Government’s review into the Franchising Code of Conduct.

ARA CEO Paul Zahra says franchise networks play an important role in Australia’s SMB retail landscape and remain a key focus for the ARA, which represents and supports some of the country’s largest, national franchisors and franchisees.

“The review of the Franchising Code of Conduct provides the opportunity to ensure that regulation is fit-for-purpose and that we strike the right balance between the interests of franchisees and franchisors,” he said.

“The ARA will consult with our Leasing and Franchising Advisory Committee, our Quick Service Restaurant Advisory Committee and other members to outline the issues with the current system and identify opportunities for improvement.

“Improving the regulatory framework for franchise networks will help set these businesses up for success in challenging times for retailers.

“We look forward to working with Small Business Minister Julie Collins and the Albanese Government to play our role in the consultation and reform process to come,” Mr Zahra said.

A consultation paper is expected to be released in the coming days, inviting small businesses and franchisors to have their say. The review’s terms of reference are now available online.

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