Franchise Sector - Federation Chamber Speech

I would like to begin by thanking the member for Oxley for moving this important motion. The member for Oxley is a relentless advocate for Australia's small business community, and this motion is evidence of that fact. As a former small business owner myself, I know firsthand the challenges of running your own business—challenges such as juggling your own marketing, administration, tax and superannuation at the same time as keeping clients happy by ensuring you deliver the best possible product and the best possible service.

For franchisees, these challenges can be particularly acute. In addition to the general challenges faced by all small businesses, franchisees face their own unique challenges, such as running a small business with limited autonomy and managing their relationship with and obligations to their franchisor. A number of my constituents are either franchisees or franchisors. I have a number of friends who run McDonalds chains here. Also, one of the highly successful Canberra business women, Louise Curtis, owns Lollypotz, which has been franchising for about the last two years. Like so many small businesses, that business began at the kitchen table and is now an absolute empire. I take my hat off to Louise Curtis for her great work and her great business.

These challenges aside, a franchise can be an incredibly rewarding endeavour. A franchise can provide entrepreneurial business owners with a model for growing their business and sharing their expertise with other aspiring small business owners. For those looking to start a business, franchising can provide them with the opportunity and confidence to do so. Like every business, franchises need the right regulatory environment to operate in. Labor understands this. That is why, on 4 January 2013, the Labor government appointed Alan Wein to review the franchising code of conduct and to make recommendations to ensure the franchising sector was operating in the best interests of its participants as a whole.

Mr Wein undertook a wide-ranging review. Central to his review was consultation with Australian franchisees and franchisors. He submitted his final report to government on 30 April last year. After we received the review Labor issued a consultation paper that was open for submissions from 17 June to 9 July. The aim of this consultation process was to ensure we understood the practical impact to the franchise community of accepting Mr Wein's recommendations. This process received over 160 submissions and included targeted consultation among key stakeholders.

On 24 July last year, at the COSBOA small business summit in Brisbane, Labor announced its response to the review. It included a regulation impact statement so that these recommendations could be implemented as soon as possible. The key changes recommended included building on an effective disclosure regime by ensuring that disclosure remains relevant, timely, effective and reflecting modern changes in our economy such as the growth of online shopping; clarifying that the government expects franchisors and franchisees to act in good faith toward one another by making it a requirement under the code; enhancing compliance and enforcement of the code by providing additional tools to the Commonwealth regulator, the Australian Competition and Consumer Commission; and clarifying the policy intent of provisions of the code that have caused unintentional confusion or administrative burden without any corresponding benefit.

As we all know, the federal election intervened before we had the chance to implement these recommendations. However, in good faith we believed that the new Abbott government would do so shortly after coming into power. We had every reason to believe it. On 7 January this year the Minister for Small Business is quoted as saying that the coalition would act early in this year to maintain world-class regulatory support for a crucial part of the economy, and on 6 January he is quoted in SmartCompany magazine as saying 'the Coalition is "working as we speak" to ensure that changes are made, with a regulatory impact process expected to be completed by mid-year'. Yet here we are nearly seven months after the election, and the Abbott government has done nothing to implement the recommendations of the Wein review. The great irony is that one of the key aims of the Wein review was to provide certainty to Australia's franchise sector, yet now the sector has less certainty than ever because it does not know if or when the Abbott government might implement these recommendations.

We recognise that small businesses are the backbone of our economy; that is why we moved to implement the recommendations of the review as a matter of priority while in government last year. This delay simply is not good enough, and Australian small businesses, including about 73,000 franchises and about 1,180 franchisors, demand better.

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