FCA backs WA Government’s Retail Shops Bill Amendment 2011

The Franchise Council of Australia (FCA) has given support to the Western Australian Government’s Commercial Tenancy (Retail Shops) Agreements Amendment Bill 2011, which is currently being debated in parliament.

According to FCA Executive Director, Steve Wright, the Bill seeks to resolve the issues of unfair imbalance of information between landlords and tenants.

“This imbalance is a function of history that is now outdated and needs to be brought into line with current practice – especially in franchising where many franchisees are the very good tenants of landlords,” says Wright.

“The fact that landlords have all the information and tenants very little is the exact opposite of what happens in franchising, where there is a very strong constructive bias toward giving the franchisee all the necessary information to make good commercial judgments.”

Wright explains how this unfair imbalance is a discrepancy that needed to be redressed to allow the retail tenancy market to operate fairly and effectively. Currently, the information imbalance had distorted the market and places the tenants at a substantial disadvantage in lease negotiations.

“Currently landlords hold all the cards as they require tenants to disclose turnover as part of leases, but there is no reciprocal obligation on landlords to disclose rental information. Landlords can sometimes make it difficult for tenants to obtain market information,” says Wright.

The WA Government are currently airing four options to improve information balance. FCA, out of the four, the option for extending valuers’ access to lease information is the best.