Now is not the right time to introduce franchise-focused state legislation in Western Australia: this is the finding of a WA parliamentary committee inquiry into a private member’s bill proposing financial penalties for breaches of the Franchising Code of Conduct, and requiring all parties in franchising to act in good faith. WA MP Peter Abetz introduced the bill last year.

The Franchise Council of Australia opposes any state regulation for the sector, currently governed by federal regulation, and welcomed the Committee’s findings. FCA executive director Steve Wright said I think we can say the Report is a victory for common sense.

The committee found issues of misconduct were not widespread across the franchising sector and that issues could be reasonably handled by the recent amendments to the Franchising Code of Conduct and the Competition and Consumer Act.

The Report reads: Importantly, these have been undertaken within the existing national regulatory framework that is well-suited to franchising. The federal government has confirmed it will review the adequacy of these amendments in 2013.

Given the significance of these amendments, and the importance of uniform legislation to easing the cost and compliance burden for small businesses, the Committee is not convinced that the Bill is an appropriate measure at this time. Hence, it has recommended that the Bill be opposed.

Included in the report is a discussion on how the planned WA Small Business Commissioner may prove a better vehicle for dealing with franchising disputes.

However, University of New South Wales associate professor, Frank Zumbo, who helped draft the bill disagrees with the findings.

Giving the Courts the power to impose penalties for breaches of the Franchising Code has previously been unanimously recommended by Federal and South Australian Parliamentary Committees into Franchising. A failure to support the Western Australian Franchising Bill simply gives those franchisors who are not complying with the Franchising Code the green light to continue with their breaches of the Code.

The Franchising Bill will not impose additional compliance costs as all franchisors should already be fully complying with the Franchising Code and acting in accordance with the existing general duty to act in good faith.

* The findings were not unanimous. Deputy chair Bill Johnston expressed a dissenting view.