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Parliamentary inquiry into the franchise sector underway

Scrutiny of the franchise sector is heating up as a parliamentary inquiry into the franchises and the Franchising Code of Conduct is expected to deliver its findings at the end of this year. Over 100 submissions have been made by franchisees claiming unfair remuneration agreements, exploitation of workers and a general lack of transparency.

The industry has been rife with scandal in recent times with many well-publicised cases of misconduct, including the recent Fair Work investigation into 7-Eleven, which found franchisees across the network had been deliberately and systematically underpaying its employees.

Franchising as a whole could even be under threat with Caltex announcing that it is abandoning the business model. Many other corporations may follow suit with investors of pizza chain Dominos calling for similar action after recent weak financial results.

Australia Post is expected to be at the centre of the inquiry with allegations they have misled franchisees about the growth ability of the business. Mortgage Choice is also expected to be a focus with franchisees publicly protesting against unfair remuneration agreements.

However, the enquiry may be too little, too late, for the thousands of franchisees that have collapsed in the last few years as well as those on the brink. It seems a significant imbalance of power between franchisors and franchisees has lead to the bankruptcy of many ordinary Australians who aimed to live out their business ownership dreams through the franchise model.

The full report is due to be handed down at the end of this year, but it remains to be seen whether the inquiry will lead to systemic change in industry.

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