…a franchisee in dispute with his franchisor has paid the ultimate price, taking his own life…If the Government ignores complaints about the ACCC's inaction this is where Labor could step up to the plate. The death of a franchisee is serious and I, for one, can't ignore it.
The Australian
July 11, 2006
After the death of a salesman, a chance to reform franchising
Peter Swtzer
JUST when the federal Government has called for franchisees to make submissions to a review of the industry's code of conduct, a franchisee in dispute with his franchisor has paid the ultimate price, taking his own life.
Another franchisee also in dispute with the same franchisor has accused the Australian Competition and Consumer Commission of having blood on its hands.
For legal and family bereavement considerations names have not been published but the incident shows the under-the-surface issues that need to be considered more seriously by everyone in this very successful industry.
It also comes at a time when federal Labor is in desperate need of a credible small business policy following a plan for the sector released by Opposition Leader Kim Beazley, which has received a thumbs-down in a recent poll. "SMEs (small and medium-size enterprises) have traditionally favoured the Liberal Party so the results are not wholly surprising," said David Ratcliffe the chairman of accounting business PKF. "But the scale of the rejection of the five-point plan suggests Labor has failed to empathise with SMEs owner-managers' real concerns."
In a pitch for middle Australia, Mr Beazley linked small business to the group and told the Council of Small Business Organisations of Australia's (COSBOA) national small business summit late last month that he would free up small businesses from onerous paperwork as well as improve skills and telecommunications services "to help drive the next wave of productivity in the Australian economy".
The plan promised:
- A $200 Business Skills Credit to all new small businesses.
- A single superannuation "clearing house" to end the super paperwork nightmare.
- A red-tape-reduction fund and a "small-business-first" approach to regulation design.
- Ensuring government and corporate debtors pay bills on time, to improve cash flow.
- Cheaper phone calls and greater access to IT applications.
What seems like a no-brainer for a party that can never expect to win over small business employers, with their industrial relations policy of bringing back unfair dismissal and killing off Australian Workplace Agreements, is to go where the Howard Government fears to tread. And that's where bigger business exploits small business.
The PKF survey of SMEs found 83 per cent of small business owners would not vote for Labor on the strength of its plan and over two-thirds said it missed the mark completely.
The superannuation clearing house and cheaper telecommunications were popular among respondents but red-tape promises and small business being put first did not pass the scepticism test.
Labor has to stand up for small business battling unfair practices.
This is a concern for small businesses battling the likes of Woolworths and Coles. Newsagents, pharmacists, grocers, liquor stores, service stations, hotels and other smaller operators have felt the pain of competing against big business.
Only last week, Woolworths copped a guilty verdict in a breach of the Trade Practices Act after a judge found it had entered illegal deeds with liquor licence applicants in the late 1990s and had acted anti-competitively.
The court accepted evidence that lawyers for Woolworths and Coles inform each other of licence applications. There was evidence that legal costs occasionally were shared. Woolworths was accused of objecting to small players applying for a liquor licence, taking it to court and then negotiating virtually on the steps of the court. The applicant would accept restrictive trading conditions but be saved from an expensive court case.
I am a big fan of franchising when done properly but some franchise systems have become too big and have over-sold their businesses.
Over the past week I have learnt that a group of 7-Eleven franchisees has protested to the Victorian Small Business Commissioner and the ACCC.
Consumer affairs departments have tribunals where aggrieved parties can air their issues without the need for lawyers. So if the problems in franchising are as small as the Franchise Council of Australia insists - and they might be right - then the cost to any future federal government should not be prohibitive.
Before the Franchise Code of Conduct was introduced in 1998, an academic told me "there once was the wild, wild West and now there's franchising".
I reckon a lot of the scoundrels have been chased out of town but a number of varmints need to fear a franchising sheriff.
If the Government ignores complaints about the ACCC's inaction this is where Labor could step up to the plate. The death of a franchisee is serious and I, for one, can't ignore it.
Submissions to the Review of Franchising Code are due by August 15 at Office of Small Business, GPO Box 9839 Canberra ACT 2601.
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Risks: Suicide, Intimidation through lawyers, Conspiracy to commit an unlawful act, Can't afford to sue, Wild West of the business world, Australia, 20060711 After the
