Mark Dreyfus (Isaacs, Australian Labor Party) Share this | Hansard source

Franchising is a very popular form of doing business in Australia. I am indebted to the Parliamentary Joint Committee on Corporations and Financial Services, for some statistics from their report of December 2008, entitled Opportunity not opportunism: improving conduct in Australian franchising, that give us a bit of the context in which this question should be considered. What they say in the report is that in 2008 there were approximately 1,100 business-format franchisors in Australia, compared with 960 in 2006 and 850 in 2004. They go on to say that there are an estimated 71,400 franchised units in 2008, turning over $61 billion in 2007 and employing over 400,000 people. We can see from those statistics just what a large contribution the franchising industry and businesses that are conducted in the form of franchising make to the Australian economy.

Indeed, it is a much more common form of business than it is in the United States. We read elsewhere in the report that it has been estimated that there is one franchise for every 20,000 citizens in Australia, which is around five times the density of franchise systems in the United States. So we should be in no doubt as to the importance of this sector and we should also be in no doubt that this sector is growing.

It is also important when considering the form of regulation that is appropriate for this industry to consider the fact that the mandatory franchising code was only introduced in 1998 and followed the introduction of a voluntary code in 1993. What we have seen in the years since the first introduction of the voluntary code, and then the introduction of a mandatory code, is increasing popularity of this form of business and a continued expansion of the sector. What also needs to be steadily borne in mind in considering regulation is that most of the franchising businesses in Australia, from the point of view of both franchisors and franchisees, are successful businesses which are conducted in an amicable way.

That said, we all know—every member of this parliament knows—that there are problems in the franchising sector. Every member of this parliament would have received, I would be certain, complaints from people involved in franchising in their electorate offices and those complaints would possibly have been in respect of some very large franchise systems and possibly in respect of some quite small franchise systems. What is also clear is that the problems that members of this parliament have heard from people in the franchising sector are not new. They did not suddenly come into being in November 2007 on the change of government. Rather, they are problems which have been identified, have been experienced and have been known of for very many years. There is more than a little disingenuousness in the speech that we have just heard from the member for Canning in this area. I would need to put into the history of this matter the Matthews Review, commissioned by the former government, commissioned by the Minister for Small Business in June 2006. I am just going to say a little bit about the history of this matter. In the last full year of the former government—

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