Julie Owens (Parramatta, Australian Labor Party) Share this | Hansard source

I too commend the member for Canning for putting this motion to the House. Any time we find a group of people who have such little power, relative to the other side of the table, or who enter into agreements such as these with such little business skill we do need to make sure we have legislation in place which protects the interests of the weaker party. Once again, I commend him for moving this motion.

There are some 72,000-odd franchises in Australia. We would not go through a day without touching one of them either at the coffee shop, the bakery, the news outlet or the decor shop. They are everywhere in my community at the moment. At its best, it is a genuine symbiotic relationship where the franchisee has access to the power of the brand but also protects the power of the brand through the successful operation of the franchise. At its worst, it is exploitative. In Australia we have the full range of franchises. We can all look around and see some incredibly successful ones—we know who they are and I will not name them—and others who have attracted quite considerable media attention because of their behaviour.

I want to cover some of the changes that were introduced on 1 March because to some extent they postdate some of the criticisms, particularly those in paragraphs (3) and (4). They do not completely negate them, but I do want to get on the record that there has been some action on franchising. In fact, it began under the previous government in 2006 with the review of the operation of the disclosure provisions in part 2 of the code. There were a number of recommendations—in fact, 27—and 15 were accepted by the former government and six were agreed in principle. They came into effect on 1 March 2008.

There were some improvements there. The changes to the disclosure requirements mean that franchisors are now required to disclose such details as the name and contact details of each franchisee who has either transferred, terminated, not renewed, ceased to operate or was bought out in the last three years; the history of the franchise site and territory; and the details about the directors of the franchise and any material relevant facts in writing within 14 days of them becoming known. The ACCC also assists prospective franchisees by making available the Franchisee Manual, which encourages prospective franchisees to understand the risks they face when entering into a franchise. Those changes are still relatively new, and I watch with great interest how they are applied and how successfully the ACCC is able to prosecute franchisors who are in breach of that code.

Between the 2006 review and the implementation of the new code in March, two other reviews were undertaken by state governments. One was undertaken by South Australia in response to the accusation that Bakers Delight franchisors were involved in churning at the time. The other, in 2007, was undertaken by the Western Australian government, again in response to a particular circumstance, when Competitive Foods Australia Ltd, which holds some 50 franchising contracts to operate KFC stores in Western Australia, decided not to renew any of those franchises when their terms concluded. Both those reviews put forward recommendations concerning disclosure provisions and churning and also unconscionable conduct, but to date there has been no response to them. Now, of course, the Parliamentary Joint Committee on Corporations and Financial Services is inquiring into the Franchising Code of Conduct and has referred to both of those reviews in its background notes. Early next year we should see a report from that committee which incorporates recommendations from those two state governments as well as evidence from the dozens of franchisees that have made submissions to date.

So there is movement in this issue. It will never be finished. There will always be someone who finds a way around it and there will always be weaker parties which enter into negotiations without full information. So we must be vigilant, but there is action on it and I look forward to seeing the results of that. (Time expired)

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