The business relationship between franchisees and franchisors is to be investigated by a Federal parliamentary committee.
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A notice of motion successfully moved by Nationals Senator for New South Wales John Williams has authorised the Parliamentary Joint Committee on Corporations and Financial Services to examine all aspects of agreements between franchisees and franchisors, including whether the Franchise Code of Conduct is effective.
Senator Williams has met with a number of franchisees and has heard what he describes as horror stories about how they have been treated by the parent company.
He said instances include misleading financial figures being provided before agreements were signed, franchisees forced to purchase products from suppliers authorised by the parent company when they could be purchased cheaper elsewhere, and a lack of transparency over lease agreements and dispute resolution.
Senator Williams said whilst there are many thousands of success stories in the franchise sector, he has met people who have invested their life savings only to walk away with nothing when the business failed because of reasons outside their control..
“This inquiry will look at what works well and what doesn’t under the Franchise Code of Conduct, and a focus will be on how transparent these agreements are.
“The impact of Australian Consumer Law unfair contract provisions on new, renewed and terminated franchise agreements entered into since November 12 2016 will be considered.”
“Whilst the Franchise Code of Conduct will be in the spotlight, the operation of the Oil Code of Conduct will also be reviewed as part of the inquiry”, Senator Williams said.
The inquiry will report by September 30 this year.
