Business Franchise Australia


Franchise Inquiry Needs to Consider Positive and Poor Performance

The peak representative organisation of Australia’s franchise community, the Franchise Council of Australia, will continue to engage constructively and thoughtfully with any review into the sector.

Just weeks after the Franchise Council of Australia asked the Australian Small Business and Family Enterprise Ombudsman, Ms Kate Carnell, to instigate an objective and evidence-based inquiry, the Senate has resolved to commence a parliamentary inquiry.

The FCA urged a considered examination of the impact of challenging market conditions on small business and how the franchise model can support the success of small business owners and impact on competitiveness.

It is unclear how the Senate 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. 

Despite being the recognised and respected representative body of the franchise community, the FCA was not consulted on the terms of reference or invited to contribute the valuable insights reflected in the submission to Ms Carnell calling for an inquiry.

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.  Industry-led initiatives are supporting the best in franchising.

The FCA encourages all stakeholders in the success of Australian franchising to contribute to the parliamentary inquiry.  This will 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.

Ensuring that there is a full understanding of the current regulatory and competitive environment will mean that any recommendations for additional red-tape, policy change, adjustment to agency operations or new public education and awareness campaigns, have been thoroughly assessed for their likely impacts.

The identification of any gaps or deficiencies, and some scrutiny of regulatory enforcement action, would be helpful and beneficial at this time, and help establish whether the current comprehensively regulatory framework is ‘fit for purpose’, fully activated and enforced. 

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.