POLICY TO FORGE OUR FUTURE CAIRNS TNQ REGIONAL PRIORITIES 2022-23
FRANCHISE REFORM
COUNCIL: ALL TNQ STATE ELECTORATE: ALL TNQ FEDERAL ELECTORATES: KENNEDY, LEICHHARDT
BRIEFING NOTE SUMMARY • There are an estimated 1,344 franchise networks in Australia. • 537,000+ employees remain at serious distorted risk of unfair practices by their franchisors. • At-risk franchisees also need and deserve better protection within their franchise agreements. • The difficulty for any small business in correcting a wrong is the balance of power against them and the cost of seeking redress. • Protections afforded to new vehicle dealership agreements should be extended to other franchise categories. • Reforms need to be implemented to ensure at-risk franchisees gain protections upon the imminent renewal of thousands of franchise agreements in the new year.
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THE ISSUE It is estimated there are 1,344 franchise networks in Australia, with 98,000+ individual franchised outlets, employing more than 598,000 people. The segment generates approximately $184B annually, about 14% of the total Australian GDP. The demographics range from typically sole trader or partnership family businesses with basic knowledge of business practices to more significant, sophisticated entities that may benefit from university-qualified people at the helm or close by. The common trait of all these businesses is that they are relatively substantial investments for the owners, considering their wealth and resources. Often, they are a family’s entire multigenerational or lifetime savings being put at risk. Outside of franchisees now protected under Part 5 of the 2021 Regulations, 94,000+ franchisee businesses with 537,000+ employees remain at serious distorted risk of unfair practices by their franchisors. A great majority of these are small and family businesses.
These at-risk franchisees also need and deserve better protection within their franchise agreements. The vast majority of these franchisees will not have: • • • •
Any umbrella association protecting or advocating for their interests; A sophisticated understanding of business; High-level advice readily available in their business organisation; or Significant funds available to fight for a fair outcome when they are victims of a franchisor.
