Franchisees get MP’s help

Peter Abetz MLA has been campaigining since 2009 for Federal protection for franchisees.
Peter Abetz MLA has been campaigining since 2009 for Federal protection for franchisees.

Federal legislation just passed enables the Australian Competition and Consumer Commission (ACCC) to protect franchisees such as those who begged for aid as soon as Mr Abetz took office in 2008.

‘With the first one, I thought, ‘this can’t possibly be happening in Australia ” surely we have better laws’,’ he said.

Investigating, he uncovered ‘totally unreasonable’ conduct by fast food, ice cream and bakery empires.

One forced franchisees to buy its own costly ingredients, while cheaper, better ones were available in supermarkets.

Others repeatedly sold stores in the same locations despite knowing each had failed, a practice known as ‘churning’.

One young man, Mr Abetz said, had his franchisor accuse him of embezzlement and terminated him without providing any reasons, evidence or opportunity for defence.

He said the tactics had prevented people making enough to repay the loans they had needed to buy their stores.

‘People stood to lose everything,’ he said.

‘They were drawing on all the equity in their homes; they ended up unable to pay bills and having their businesses repossessed.

‘It was devastating ” one couple had borrowed against their parents’ equity and ended up losing the house.

‘More and more people started coming to see me ‘e: 8pt;”>’They couldn’t muster $100,000 for legal fees, even if they knew they were in the right.’

Mr Abetz said the new legislation included all the reforms of his original Bill and in fact went even further, with added elements to ensure small business owners were protected.

‘I feel vindicated, and glad this long battle has been justified,’ he said.

Franchise Council of Australia chairman Michael Paul said the process had been a positive one and welcomed the Government’s commitment to enhancing the sector.

Franchising in Australia

A 2012 Griffith University study is the most recent, complete Australian survey. 

It said Australia was home to 1137 franchisors and about 73,000 franchises.

More than 400 000 people were employed directly in franchising.

The sales turnover of the sector was estimated at $131 billion.

Non-food retailing represented 27 per cent of franchisors and food retailing 18 per cent.