Franchisee activists vow to fight on after WA bill falls over; Abetz says state-based legislation in NSW and Qld to follow

Franchisee activists have raised the spectre of further state-based franchising legislation, after a private member’s franchise bill fell over in Western Australia this week by just one vote.

The vote was lost after the speaker, Nationals MP Grant Woodhams, used his casting vote to defeat it. But the bill’s author, Liberal MP Peter Abetz, says MPs from Queensland and New South Wales have told him they plan on bringing similar legislation to their own states.

The long-discussed Western Australian Franchising Bill sought to impose financial penalties for breaches of the Franchising Code of Conduct and provide a statutory duty of good faith. Abetz says he is not deterred despite losing the vote.

“I wanted this bill to pass to provide some interim protection for franchisees against dubious franchising practices while the Nationals and the Liberal Government negotiate a way for the intent of my legislation to be taken on board by means of a revised Small Business Commissioner model.”

Abetz said that “regrettably many MPs were opposed to the legislation because they were of the view that the Federal Government should be implementing this legislation rather than the state.”

“By taking that stance and with the Federal Government failing to act, those opposing the bill have unfortunately denied WA franchisees the extra protection that an obligation to act in good faith in all matters relating to a franchising agreement would have provided.”

The rejection of the WA bill follows the passing of the South Australian Small Business Commissioner Act, which enables the commissioner to change the franchising code of conduct following consultation with industry.

The SA bill was welcomed by franchisee groups such as the Franchisees Association of Australia and the National Franchisee Coalition, but was criticised by the Franchise Council of Australia and Federal Government, which argue that state-by-state legislation is inferior to a national approach.

Abetz says the close vote in WA and the passing of the SA small business legislation should send a “very loud and clear message to Canberra”.

Small Business Minister Nick Sherry has repeatedly ruled out a review of the Franchising Code of Conduct before 2013, saying more time is needed to review recent amendments to the code and a national approach to franchising is superior to state-by-state rules.

Associate Professor Frank Zumbo, competition and consumer law expert from the University of New South Wales, says he expects franchising issues will remain keenly debated in WA.

“The evenly divided nature of the vote means that there was clearly strong support for the WA Franchising Bill. Given that strong support, one would expect that the issue of franchising and small business reform will continue to be front and centre in Western Australia, especially as a WA Small Business Commissioner is about to be appointed,” Zumbo told SmartCompany.