The release of the Wein Report into the Franchising Code of Conduct needs to mark the end of the move by some states to regulate franchising separately.
South Australia previously announced it would reform its state franchising laws rather than relying on the national legislation.
But the Wein Report now makes it clear that there is no need for any state based legislation.
The report has bipartisan support at federal level making it extremely difficult for state governments to justify any regulatory intervention at a state level.
Submissions to the review of the Franchising Code of Conduct were also overwhelmingly in support for the retention of a single, national regulatory scheme.
“Evidence clearly indicates that a national system reduces duplication, red tape, uncertainty, compliance costs and ensures franchisors are in the best position to develop and maintain an effective national business model,” according to one submission.
The push by South Australia to introduce state based regulation of franchising was primarily based on the absence of any “good faith” provision in the Franchising Code of Conduct.
Now that the Wein Report has recommended the implementation of a good faith provision, it’s going to be pretty hard for South Australia to justify a separate layer of legislation.
When I talked to Jason Gehrke of the Franchise Advisory Centre about the Wein Report this morning his view was any introduction of state based regulation would be a step backwards.
“As a nation we have started to harmonise things like education and health and it is absolutely regressive if states begin enacting separate legislation for franchising,” Gehrke says.
Clearly, any argument that state based legislation is needed doesn’t hold water. There is a national legislative framework, and it is the best and most effective framework to have.
Common sense must prevail in South Australia and the other states.
One set of national rules and regulations is enough for franchises to deal with.
Cara Waters is a former SmartCompany editor. Previously, Cara was a senior reporter for the Financial Times’ website and worked for The Sunday Times in London.
