The franchise industry is on the back foot after the South Australian Small Business Commissioner’s bill passed through state Parliament on the weekend, allowing for the introduction of a state-based franchising code of conduct in conjunction with the national code.
One South Australian franchise has already warned he will stop opening any more stores in the state, in protest to what he believes is more unnecessary red tape.
GameTraders managing director Mark Langford says he is not concerned the new commissioner will make it risky to open stores, but nevertheless is making the decision to halt store growth in the state due to the act.
“I’m not concerned about the risk. This is just a protest. I’m not going to open any more stores because I’m sick of the stupidity of state governments.”
The bill, which has been debated and drafted in one form or another for several years, was passed with one amendment which requires any changes to code of conduct be made after consultation with industry.
“The Government is quite happy to have that amendment,” says MP Tony Piccolo, who has been a champion of state-based franchising laws for several years. “It doesn’t in any way change the content of the act itself.”
“It just means if you’re going to have a mandatory code of practice for an industry, like franchising, submissions and consultations need to be made.”
Piccolo said he was glad to be finished with the campaign, saying the next job is to appoint a commissioner and prepare the various regulations that are required for such a role.
However, the franchise industry warns the new bill will make the trading environment for franchises even more unstable.
“This is just more red tape to deal with,” Langford says. “We wanted to see something like the Victorian model, but instead this is the only state which has a commissioner that is able to change franchise laws.”
The FCA and South Australian Government have been at odds during the entire debate process. In a statement released yesterday, Piccolo said the behaviour of the Liberal Party and the FCA was “disgraceful”, saying they had engaged in a scare campaign.
The Liberal Party voted against the bill, although Family First, the Greens and independent members voted in favour.
The franchise industry says the bill will now force the Government to go through an entire consultation process for a state-based code of conduct, saying this is redundant as the national code already went down that path before.
Langford adds this is an unnecessary regulatory burden. However, Piccolo says “this is the beauty of the way we have done it”.
“You can actually have codes of conduct which are tailored to different industries. One possibility is to take an existing national code of conduct and have the commissioner add to it.”
With regard to the actual position of the commissioner, Piccolo says that ideally, this person would have a good understanding of consumer and commercial law, along with some business experience.
“I’m sure the minister won’t be short of applicants – it will be an interesting job,” he says.
Some within the industry have pointed to University of New South Wales professor Frank Zumbo as a possible candidate, noting that he also drafted the legislation. However, Zumbo has played down expectations.
“Right now, it’s important that the role is established. I’m happy to assist with the Government going forward, but right now we’re just looking at establishing the office.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
