ASIC franchise bans a timely reminder on franchisee due diligence
News yesterday of an appliance rental franchise along with several of its franchisees, found to be in serious breach of consumer credit laws, is a timely reminder of the extensive research you must do before investing your money and your reputation in a business.
One of the hallmarks of a reputable franchise business is a commitment to high standards of personal and professional conduct. These values are evident through membership with associations like the Franchise Council of Australia, which require the brand to uphold the FCA member standards including but not limited to the Franchising Code of Conduct.
FCA General Manager Kym De Britt says it can be difficult for prospective franchisees looking at investing in a particular franchise to ascertain their credibility.
“It’s really important to seek out businesses that have invested in their own sector. A great way to do that is by looking for those who have committed to the member standards of their relevant association.
“We often receive calls from people in the initial stages of their research wanting to know if a certain brand is reputable. We encourage them to make enquiries, first to find out whether there are any legal proceedings against the brand, but also to ensure they are committed to their industry and their sector via association membership and sector engagement.
“Along with due diligence and pre-entry education, one of our key mantras is, ‘Don’t sign without the (FCA) sign'. The FCA proud member logo shows a franchise system’s focus on best practice in franchising and the betterment of the sector. It also means they have been through due process and approved for membership,” he says.
For a list of current Franchise Council of Australia member and information on Member Standards, go to www.franchise.org.au