Franchisee complaint levels improving, constant vigilance advised

By Patrick Avenell

Better education and more discerning buyers have resulted in an improvement to the number of complaints being made against franchisors, according to ACCC deputy chair Michael Schaper.

At the Franchising Council of Australia conference yesterday, Shaper said that although the number of complaints being made against franchisors has remained steady, the industry has been growing rapidly, meaning the proportion of complaints to total franchises has decreased.

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Schaper attributed this improvement to the education programs being conducted by the ACCC. These education campaigns, run in conjunction with Griffith University, are designed to teach would-be franchisees their rights within franchising agreements and to make sure they conduct due diligence of the franchise system they are buying into.

“The number of franchising complaints has remained relatively static over the last few years despite the growth of the sector," Shaper said. "This is a testament to the successful education, engagement and outreach programme for franchisors, franchisees and potential franchisees.

“And whilst complaints have remained about the same, education is increasing."

A number of retailers in the electrical and appliance industry are run as franchise systems, or membership systems similar to franchises. These include Harvey Norman, The Good Guys and Betta Home Living.

Despite these improvements, Schaper warned prospective franchisees to remain constantly vigilant. He said the increasing knowledge of franchisees as highlighted the inadequacies of many franchise systems.

“With franchisees having an increasing awareness of their rights, it is becoming clear that a large proportion of complaints are a result of some franchisors failing to meet best practice," he said.

 “The ACCC continues to be concerned about some franchisors not providing documentation, engaging in misleading conduct or using inflated income claims to sell a franchise.”

Click here to learn more about the ACCC's franchising code of conduct.

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