Franchise executives are heavily opposed to a proposed new set of franchising rules for South Australia, according to a survey of Franchise Council of Australia members.
South Australian MP, Tony Piccolo, is continuing in his quest to develop a state-wide legislation for the South Australian franchising community in response to what he regards as inadequate changes to the national regulation.
But the FCA’s survey revealed that 95.1 percent of the franchise executives who responded reject individual state regulation of the sector. And of those surveyed (120 plus out of the 650 members) 84 percent believed the proposed rules would detract from the value of franchise systems within the state; nearly 80 percent suggested the legislation would influence their attitudes to investment in South Australia.
Steve Wright, executive director of the FCA, was not surprised by the statistics. “The results of the survey formalise what we have suspected for some time, that there is almost unanimous opposition to this initiative,” he said.
“There is no upside to this legislation. It would be disastrous for franchisors, franchisees and damaging to South Australian economy,” he added. “It would make it harder for small business owners to start franchises in SA and more difficult to sell them. From our point of view, it is taking South Australia back to the days of the narrow gauge railway.”
South Australian franchisee for Outside Concepts, Jock Dean, told Franchising the proposed South Australian law would have a negative impact on his ability to sell his franchise within the next couple of years. “The banks are getting scared and reticent about lending. I could lose a lot of money.”
Franchisee Tony Melhem, chairman of the FCA national franchisee forum, told Franchising “This legislation will make it harder to get funding, to buy a franchise, to sell a franchise. I honestly don’t know how you can regulate any industry against unconscionable conduct. We have the laws to protect everyone, and if franchising becomes more regulated who would want to be involved?”
Melhem was keen to point to the need for streamlined regulation and improved business support rather than tightening franchise activity. “This legislation will create more red tape. What I want from the Government is to make things easier, I want to see things streamlined.”
The survey also raised the issue of what Piccolo has called “rogue franchisors”. Wright said none of the respondents believed rogue operators are widespread among the association’s membership.
Franchisee Jock Dean agreed. “There are not too many franchisors misbehaving and I’ve been in franchising 11 years,” he said.