Background to the Inquiry
In the wake of disputes in the franchise sector during 2017 that significantly impacted on franchisors like 7-Eleven, Domino's Pizza, Caltex, and Retail Food Group, the Minister for Small and Family Business, Craig Laundy MP, and Nationals Senator, John Williams, met with franchisees from various franchise networks and representatives of the ACCC and the ASIC in early March 2018 to understand the experiences of franchisees in the sector.
Tean Kerr, a Partner from Lander & Rogers, participated in that meeting because of his extensive experience working with pools of Caltex franchisees that were dealing with issues within their franchise network.
Following that meeting, Senator Williams brought a motion before the Senate to establish a Parliamentary Inquiry into the operation and effectiveness of the Franchising Code of Conduct (and also the Oil Code of Conduct). The motion past unopposed and the Inquiry's terms of reference are available here.
Do potential franchisees get sufficient information?
The Inquiry is particularly focused on whether the current Codes facilitate the disclosure of sufficient and accurate information to potential franchisees when deciding to take up a franchise.
Emphasis will also be placed on dispute resolution mechanisms in franchise arrangements and the termination of those arrangements.
Invitations to share experiences and recommendations with the Inquiry
Submissions to the Parliamentary Joint Committee on Corporations and Financial Services close on Friday 4 May 2018, and the Committee is to report by 30 September 2018.
The Committee has invited "individual stories that may identify widespread issues and recommendations for reform".While inquiries of this nature can attract a large number of negative stories from aggrieved parties, there is an opportunity for successful franchise networks and franchisor representative bodies to make submissions on good news stories within the franchise sector.
What does this mean for franchisors and franchisees?
For both franchisees and franchisors, this is an opportunity to share experiences and suggest recommendations to the Committee. The Inquiry is likely a once in a decade opportunity for stakeholders in the franchise industry to have a say in the future regulation of franchise networks.
Following the Inquiry, the Committee will make recommendations for changes to the relevant legislation, regulations and government policy.