Recently I received an email from the Franchise Council of Australia imploring me to support them in their fight against the proposal by Tony Abbott’s Federal Opposition to give fairness to small business, a fight headed by the Shadow Small Business Minister Bruce Billson.
The opposition’s policy states:
“We will extend unfair contract protection currently available to consumers, to small businesses. We will ensure that big and small businesses get a ‘fair-go’ and do the right thing by each other in their respective marketplaces, delivering real and lasting benefits to consumers.”
We totally support the Opposition’s policy and will be behind Bruce Billson 100% of the way. Bruce Billson gets small business issues. He gets the fact that we are people and we should have the same rights as any other person, rights to fairness and access to due legal process. The fact that the Franchise Council is starting this campaign is concerning for many obvious reasons, one glaring concern is that they sent the email to me in the first place. They expected me, the Executive Director of COSBOA, to support them in their fight to make life difficult for honest hard working small business people. When a person or an organisation is protected for too long they do tend to become arrogant and this is a perfect example of the arrogance of the protected!
And protected they are. Current contract law protects the big franchisors from litigation.
The process we have in place is modelled on standard term contracts that have been drafted by expensive lawyers to give the big business an advantage, particularly when the nature of these contracts, which is based on take it or leave it behaviour, places extra stress and pressure on a person becoming involved in a franchise. The small business person is dealing with experienced and professional contract negotiators while they are also making many other decisions such as accessing finance, signing leases, recruiting employees and the like. These contract negotiations are NOT equal.
Before I go on let me say there are some good big franchisors. I am reliably informed that McDonalds looks after its franchisees as does Hungry Jacks. The booksellers Collins also have an empowering business model, not a controlling model. The franchisors in the real estate industry have good practices and reputations. However we believe that some 80% of franchisors are not small business friendly and have practices that are unconscionable but protected by poorly designed contract law. Also we do not want to interfere in the way large business deal with each other; we are about the mums and dads and the young and old, out there wanting to run their own business and seeing a franchise as a way to do that. But let’s go on…..
In those cases where there is a dispute and the individual franchisee knows they are right and they choose to go to court the franchisor will simply ensure that the court case goes on for so long (years and years) that the individual will run out of money to maintain the court case or their health will fail. The franchisor will win not due to the fact that they are right but due to the protection afforded the powerful and wealthy by the current system.
The way to fix this is Bruce Billson’s and the Opposition’s way – which is to extend unfair contract protection currently available to consumers, to small businesses – after all a small business is just a person.
Bruce Billson concentrates on the person in small business. He is also very aware of what big business wants. He knows the good big business and he works with them. Bruce also knows the effects of big business who misuse their power and he knows how to fix the problem with the simple easy response he has developed.
The big franchisors certainly have money and power but they have only a handful of votes. There are some 2.5 million small business people out there who vote and Mr Billson knows that COSBOA will be ensuring that small business people are aware of what policies are being offered by the political parties and that we are totally in support of the Opposition’s and Bruce Billson’s contract policy. Bruce Billson also knows that if it is good for small business people then it must be good for the economy, good for the community and good for our culture.
Finally the Franchise Council is asking local MPs to express their concerns to Bruce Billson. We also ask you to contact your local MP and let them know you support Bruce Billson’s policy. This is about fairness, about our culture and about people.
It is also worth noting that the Franchise Council claims to represent the needs of both the franchisor and the franchisee. How can their current campaign to maintain unfairness in contracts be good for the franchisees of Australia? This highlights the major reason why COSBOA was formed way back in 1977. It was formed because there was no unambiguous voice for small business in Australia. It was formed because when an organisation claims to represent both big and small business then, when push comes to shove, they will always go along with the big end of town.
Peter Strong
Executive Director
Council of Small Business of Australia (COSBOA)
Tim J Stokes · Having mentored a dozen franchisees in business management, having been a franchisee and a franchisor I agree with your comments Peter. Franchisees need to be far more aware of what they are entering into and unfortunately they go into agreements without a lot of business wisdom. This leads to them making assumptions, which can create major issues in the future about misunderstandings. Contracts need to be fair and if that takes the government to step in to make it fair then that's good for business.
3 months ago