Senate inquiry to investigate franchise sector

FCA calls for clarity.

The Senate has agreed to a parliamentary inquiry into the franchise sector, after the Franchise Council of Australia (FCA) asked Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, to instigate an objective and evidence-based inquiry.

Moved by Nationals Senator, John Williams, the inquiry will be heard by the Parliamentary Joint Committee on Corporations and Financial Services and will report by 30 September.

FCA executive chairman, Bruce Billson (pictured) said, “As the peak representative organisation of Australia’s franchise community, we will continue to engage constructively and thoughtfully with any review into the sector.”

However, according to Billson, it is unclear how the inquiry will discern between the unavoidable challenges all small business owners face and the implications for enterprise success, and those particularly relevant for the small franchise business owner.

He also said the FCA was not consulted on the terms of reference or invited to contribute insights reflected in the submission to the Ombudsman.

“The all-important mutually supporting and beneficial franchisee-franchisor collaborative relationship is not formed or deployed in its own bubble, but functions as part of a dynamic, competitive market economy,” he said.

The FCA is encouraging all stakeholders in the success of Australian franchising to contribute to the parliamentary inquiry to assist the Committee to identify the causal factors, including third party conduct by parties outside the franchise relationship, and the role of the franchise business model and its contribution to business viability, when considering cases of poor commercial outcomes.

“This kind of informed and thoughtful examination will help to identify any deficiencies or gaps in the current regulatory framework, unfair contract and fair trading protections and dispute resolution mechanisms, which the Senate has resolved to be the focus of the inquiry,” Billson said.

“An objective, balanced, informed and analytical inquiry can produce conclusions and recommendations that can help to ensure Australia maintains its reputation as a leading economy in which to develop and deploy the franchise model of entrepreneurship,” he added.

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