Behind the Headlines

Jason Gehrke, Franchise Advisory Centre

WA franchise legislation back before parliament

After an extended summer recess, the upper house of the Western Australian parliament is due to consider a new private member’s bill to legislate franchising in WA.

The bill was initially proposed late last year, less than a month after an almost identical private members bill was defeated in the lower house of parliament by one vote only a month earlier.

The new bill is almost an exact duplication of the Franchising Bill 2010 originally tabled by Liberal MP Peter Abetz. However in an unusual twist, the new Franchising Agreements Bill 2011 which also includes a few small amendments to the original bill, has been tabled in the WA upper house by Labor MP Ljiljanna Ravlich.

The new bill is scheduled for debate during the current sitting of WA parliament.

ACCC records 18 per cent rise in franchise complaints

Franchise complaints in the last six months of 2011 were 18 per cent higher than for the same period the previous year, according to statistics released by the Australian Competition and Consumer Commission (ACCC).

The ACCC recorded 308 complaints for the period July 1 to December 31, 2010, which increased to 365 complaints for the same period the following year, equivalent to an 18.5 per cent increase.

However inquiries for the corresponding period decreased from 224 in 2010 to 150 in 2011, a reduction of 33 per cent. The total of combined contacts (complaints and inquiries) for 2011 was 515 compared with 532 for 2010, and represented a net decrease of 3.2 per cent in franchising contacts.

Franchising complaints represent one half of one per cent (0.5 per cent) of total complaints received by the ACCC, and franchising inquiries just 1.5 per cent of total enquiries.

The leading cause of franchise complaints for the last six months of 2011 were (in order) contract issues, misrepresentations, disclosure issues, terminations, exclusive dealing (supply chain) issues, and unconscionable conduct.

$3m bank fraudster jailed for nine years

A former manager of the Atherton branch of Bendigo Bank has been jailed for nine years for stealing up to $3m from client accounts over a 16 year period.

Colin Carleton, who disappeared in 2010 when an internal investigation team was due to interview him, pleaded guilty to the sustained deception and blamed his actions on gambling addiction and an inexplicable need to hoard objects including tools, fridges, freezers and fresh meat.

Bendigo Bank operates under a community banking franchise model. Carleton had managed the Atherton branch for 19 years, and had maintained the fraud by skimming money from client accounts with few transactions, then intercepted and reissued bank statements to conceal the theft. He will be eligible for parole next year.

Kleenmaid directors on bail

Three former directors of franchised whitegoods retailer Kleenmaid which collapsed with debts of around $100 million are on bail pending their next court appearance to face 20 criminal charges of fraud and criminal insolvent trading.

The three directors, founder Andrew Young, his brother Bradley Young, and Gary Armstrong have been charged with 18 counts of criminal insolvent trading of debts totalling more than $4 million, and a $13 million fraud committed on Westpac Bank. A further two charges have been laid against Gary Armstrong and Andrew Young for withdrawing $330,000 from the company’s bank account just two days before it was placed in voluntary administration.

Each of the insolvent trading charges carry a maximum penalty of $200,000, five years imprisonment or both, while the fraud charges carry a maximum penalty of 12 years imprisonment. The charges were brought by the Australian Securities and Investments Commission (ASIC), after a three-year investigation.