Home' The Franchise Review : March 2017 Contents THE FRANCHISE REVIEW
about Australia’s flirtation with imposing ‘joint employer’
liabilities onto franchisors for the workplace non-compliance of
This will be an enormous disincentive to franchising, and
represents an existential threat to the successful franchise model
of enterprise. Growth and investment will be limited by brands.
‘Corporate’ retail and service outlets will be favoured over offering
franchise business opportunities, due to the risks and liabilities
they would face from the actions of others. This would weaken
investment, as well as economic and employment opportunities,
and deny enterprising Australians an attractive, less risky and
more supported pathway into their own businesses. It would
also take the wind out of the sails of a vital sector that comprises
more than 1100 brands, supporting 79,000 business units that
collectively provide 472,000 people with employment.
You’ll recall that in the lead-up to last year’s election, media
coverage of wage underpayment and workplace irregularities at
7-Eleven were prominent. Promises to ‘get tough’ on franchise
systems where a franchisee had ‘done the wrong thing’ flowed
from the Coalition, Labor and the Greens. Essentially, the
promises involved passing new laws to make the franchisor liable
for a franchisee’s contraventions of the Fair Work Act 2009,
under particular circumstances.
Other cases of Fair Work Act contraventions involving franchise
systems have maintained the media's focus and attention. After
the election, and in light of the election commitments from all
sides of politics to change the law, we have met face-to-face with
senior political leaders, including the Prime Minister, the Leader
of the Opposition and senior ministers, and we maintain an
ongoing dialogue with the Minister for Employment, Senator the
Hon. Michaelia Cash.
The Franchise Council of Australia (FCA) has dedicated
considerable resources to responding to this policy challenge,
as a poor legislative outcome poses an existential threat to the
appeal, vitality and viability of the franchise model of enterprise.
We have made several detailed submissions, participated
in FCA-specific consultation sessions and worked with the
Department of Employment on its proposed wording of the
legislation, securing some significant improvements.
This intense FCA dialogue with the government has not been
publicised, promoted in the media or disclosed widely to our
membership due to confidentiality undertakings we were
required to provide in order to have access to internal official
government documentation and processes.
Despite a number of our recommendations having been
embraced in full or in part by the government, some key
concerns remain unresolved. These can be summarised as:
• There is no case for singling out franchising when Fair Work
compliance concerns are an economy-wide issue.
• Recent court cases have proven that the existing law is
working (i.e . accessorial liability provisions), and no case has
been made as to where the law is deficient.
• As recommended by the FCA, the government is committed
to boosting funding to the Fair Work Ombudsman, increasing
penalties for breaches of the Fair Work Act and enhancing
powers to collect evidence, and these measures should be
given a chance to work.
• The legislative compliance costs are excessive, and industry-
led solutions should be preferred. The franchise sector is
leading the way on improved compliance and assurance
systems, and this industry-led encouragement should
precede any law changes.
• The government’s actions are detracting from the appeal
and success of franchising as the best form of enterprise
for getting into a small business, and will lead to businesses
avoiding the franchise model.
• International franchise systems are being advised to ‘pause’
plans for investment and new business ventures in Australia
until the outcome is clear.
• The proposed law will harm jobs, small business formation,
investment, innovation and the economic growth made
possible by the proven and successful franchise model of
With the introduction of the Fair Work Amendment (Protecting
Vulnerable Workers) Bill 2017, the FCA will be able to more
vocally and publicly pursue its advocacy on behalf of the sector,
and secure the engagement of other industry associations that
share our outlook. It is not clear at this stage whether the House
of Representatives or the Senate will conduct an inquiry, but
given the complexity and range of issues relevant to ‘vulnerable
workers’ policy, it is likely that an inquiry will occur.
Any inquiry will provide a good platform for engaging with
the Opposition, minor parties, crossbenchers, and individual
Coalition members and Senators. This is where your insights,
experiences, helpful information and credible case studies
will be important. Engaging with your elected representatives,
Bruce Billson, FCA Executive Chairman
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