Senate franchising report to be delayed again as industry awaits verdict

MATTHEW ELMAS
February 13, 2019
Smart company
Nationals Senator John Williams spearheaded the establishment of the franchising inquiry. Source: AAP/Mick Tsikas.
The release of a highly anticipated Senate report into the franchising sector is set to be delayed for the third time, according to separate sources with knowledge of the timeline.
The Senate inquiry into the effectiveness of the Franchising Code of Conduct was originally due to table its final report last September, before being delayed to December 6 and then again to tomorrow, February 14.
However, SmartCompany has been told the report has been delayed again and is now slated for early-March, with the Secretariat requesting more time to prepare the findings.
The highly anticipated report is expected to draw a line under a number of high-profile scandals in the franchising sector in recent years and deliver a verdict on how effective the industry code has been in regulating bad behaviour.
It was announced in March last year under the Parliamentary Joint Committee on Corporations and Financial Services, receiving over 300 submissions and airing the dirty laundry of the largest franchise networks in Australia.
The office of committee chair Michael Sukkar would not confirm the report will be released tomorrow when asked but would also not say whether there would be a delay.
Instead, SmartCompany was repeatedly told the report is officially scheduled to be released on February 14.
During the course of the inquiry, dozens of franchisees came forward with allegations of strong, misleading or exploitative tactics from franchise networks such as Domino’s, Retail Food Group (RFG) and Red Rooster owner Craveable Brands.
It followed a raft of media reportsabout business practices within the sector in recent years which initially prompted Nationals Senator John Williams to call for the inquiry in the first place.
Senator Williams’ office declined to comment when asked when the final report will be released.
During the inquiry, discussion centred on the way franchisors disclose information about franchise opportunities to potential business partners, the supply arrangements franchisors undertake with franchisees and the way marketing is funded within franchise networks.
The impending release of the report comes as the ACCC, which regulates the industry code, steps up its efforts to police bad behaviour in the sector, securing two major prosecutions in recent weeks for breaches.
In the first case, franchisor Ultra Tune was fined $2.6 million for breaching good faith provisions in the code, while car-wash network Geowash has been found to have misled franchisees in another case.
The watchdog has also embarked on an auditing blitz across the cafe, restaurant and takeaway industry in an attempt to weed out bad disclosure practices in the coming months.
Data released by the ACCC earlier this week revealed over 286 complaints were made about franchising code issues in 2018 by small businesses.
The majority, 191, related to alleged good faith breaches, which both Ultra Tune and Geowash were prosecuted for.
A further 82 complaints were made about inadequate disclosure, another hot topic which arose during the inquiry amid allegations many franchise networks are failing to fairly represent franchise opportunities to potential clients.