Fed Govt changes to help strengthen franchising sector

 

THE Federal Government is aiming to improve the viability of the franchise sector by the end of the year, and save it $8.6 million in red-tape, by implementing changes recommended by the Alan Wein-led review.

Treasury has announced it will introduce penalties for breaches of the Franchise Code of Conduct to protect small business owners.

A  'Future of Franchising' statement was released by the Federal Treasury on April 3, outlining plans to build on a review of the sector by Mr Wein last year.  

Mr Wein has a strong connection with franchising and was the co-founder and owner of the House franchise group of homeware stores that operate throughout Australia. He sold his interest in the company in 2000 and he has been involved in various business advisory panels including the Victorian Government’s 2010 VSBC Reference Panel into Improving Business Conduct which included Telstra and Woolworths.

The Federal Government has settled on the policy direction for franchising in light of Mr Wein’s review and started work on legislative changes to improve the sector for its participants.

These changes are expected to help cut red-tape by clarifying and streamlining the Code and removing unnecessary provisions. Treasury estimated red tape reduction for the Franchising Code could save businesses $8.6 million annually and would allow more opportunities for resources to be invested back into franchise systems to drive productivity, innovation and jobs.

A government statement said the proposed changes would “strike the right balance between the needs of franchisors and franchisees and the unique nature of the relationship between the two”.

The Federal Government announced it was committed to:

• ensuring franchisees and franchisors act in good faith in their dealings with each other;

• introducing penalties for a breach of certain provisions of the Franchising Code along with enhanced audit powers for the Australian Competition and Consumer Commission;

• improving the transparency of marketing funds; and

• improving disclosure including short form, easy to understand information for prospective franchisees.

To ensure the changes are implemented in partnership with the sector, the Federal Government has released the exposure draft bill and regulations amending the Franchising Code of Conduct for public feedback.

Although the franchising review was a concise one, it has benefitted from the long experience of Mr Wein in the sector and related small business areas. In 2008, Mr Wein was appointed by the Victorian Small Business Minister as an ambassador for small business through the Energise Enterprise initiative and in 2010, he was appointed to the Mediator’s Advisory Committee by the Victorian Small Business Commissioner, to assist and advise on legislation, legal issues, mediation practice process and standards.

In 2010, Mr Wein was appointed a member of the Law Council of Australia SME Business Committee.

The Draft Bill documents are available at the Treasury website for a consultation period ending April 30, 2014.

www.treasury.gov.au

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