Franchise Council of Australia points to state-based franchising legislation as all risk, no benefit

The Western Australian Parliament should abandon proposed state-based franchising legislation, as it is both unnecessary and potentially damaging, according to the Franchise Council of Australia .

The peak franchise advisory body cautioned that the proposed legislation would duplicate national regulations and cost the WA economy, in a submission on behalf of the industry presented to a parliamentary inquiry into a private members’ bill introduced to State Parliament late last year.

FCA Executive Director Steve Wright notes that the need for state-based legislation has already been canvassed and rejected by five inquiries since 2007, commenting that “there is simply no need for this legislation.”

Regulation of the franchise industry, he explains, is already covered by the National Franchising Code of Conduct, the Trade Practices Act and the Australian Competition and Consumer Commission.

Major reforms to the Franchising Code of Conduct were implemented in July 2010, and changes to the legislative power of the ACCC took effect in January 2011, Mr Wright adds, stating that it is important to allow these changes to take effect before proposing any further restructuring.

“Both franchisors and franchisees are telling us they don’t need or want this legislation. With increased compliance costs, a disincentive to investment in WA and duplication of the national regime, this approach is all risk with no benefit,” Mr Wright says.

In its submission to the Economics and Industry Standing Committee, the FCA has called for:

• the abandonment of state-based legislation and regulation, with the national regulatory approach to be retained
• a moratorium on further regulatory changes until 2012/13, at which time the impact of the changes announced in mid 2010 could be reviewed; and
• an increased focus on education and dispute resolution, including funding for pre-entry franchisee education and early dispute intervention.

“Research undertaken last year indicates that 95% of member respondents do not support State based legislation, and 90% said they would review their investment intentions in WA should State based legislation be passed... so it is hard to see how this can be good for the State,” he concludes.