Improving Australian Franchising

Stephen Giles, Franchise Council of Australia

It seems that the spotlight has been on the Franchise Council of Australia’s (FCA) representation activities, and in particular the efforts the FCA has put in to attempting to stave off state-based franchising legislation in South Australia (SA) and Western Australia (WA).

However, the FCA has also been taking action on a number of other fronts to improve Australian franchising to the benefit of franchisors and franchisees.

The Communiqué issued as a result of the National Retail Issues Forum convened by the FCA in Sydney provides a neat summary of some of the issues taken up on behalf of its members. Importantly the FCA is not just taking up initiatives, but seeking to work with other industry bodies to ensure the activities are collaborative and no one is reinventing the wheel.

At a strategic level the FCA has been making the following points to Government:-

1. Franchising represents successful small business. As such we do not seek handouts or protection from competition, we seek reforms that ensure that the market operates efficiently and our largely small business membership is not at an unfair competitive disadvantage.

2. The Australian retail sector is a high cost environment, and there is a lot Government can do to reduce these cost pressures. Specifically the FCA, and its industry partners, want to see reforms in:-
• Shopping centre market imbalances and conduct that cause small businesses to consistently pay above market rentals;
• Penalty wage rates, which are an unreasonable impost;
• Red tape and bureaucracy, which impose disproportionate costs on small business due to complexity, duplication and inefficiency. In this respect the SA and WA proposals for state-based legislation of franchising notwithstanding the existing comprehensive federal environment are classic examples.
• Zoning and planning restrictions, and restrictions on shop trading hours that advantage supermarkets and internet suppliers and disadvantage small businesses;
• Exemptions from GST such that imported items all bear GST, not just those items above $1,000;
• Continued focus on harmonisation of legislation across Australia.

3. The current taxation system is unnecessarily complex, and should be simplified so that compliance costs are lower;

4. Small business funding should be supplemented by a Small Business Act (SBA) modelled on the US Small Business Act and deliver not just additional funding for small business, but guarantee access for small business to government projects, research and spending.

More broadly, the FCA has been seeking to expand the pool of potential franchisees by pursuing the Government to implement a SBA-type loan guarantee program, given specific presentations to industries that announce restructuring and redundancies and pushed forward with introducing an Indigenous Franchising Project aimed at encouraging Indigenous sports people to take on a franchise.

The Franchisee Success Club has attracted significant interest, and has provided us with a pool of successful franchisees that will become our launching pad into even greater penetration of our franchisee community. Importantly, in the face of the occasional bad news story about franchising, our Franchisee Success Club helps put those stories into statistical and personal context.

These are all important initiatives that complement our regular educational and networking activities, awards, exhibitions and other events.

In today’s challenging retail environment the FCA understands that it has an important role assisting Australian franchised businesses to be competitive and successful.