Franchising Council objects to new small business laws

By Russell Emmerson  

The Franchising Council will turn to the State Parliament’s Upper House to block new small business laws it says bring in new franchising laws by stealth.

FCA executive director Steve Wright said the State Government never broached new franchising laws in its initial foray into small business reform.

“Having read the Bill, it is not what was put out for public consultation,” he said.

“We would support it if it was based on the Victorian model. . . but this creates a de facto franchising code.

“The code exists already. If you introduce another one, it implied it is stuffed, otherwise why would you need it?”

The South Australian Bill creates the role of Small Business Commissioner with a $1 million annual budget and gives him or her the power to mediate business disputes to cut court costs.

Small Business Minister Tom Koutsantonis has said the SA Bill is based on the Victorian model but Mr Wright said there remained key differences.

“In Victoria, (mediation) is the key to the success of the small business commissioner. He does that without interfering with any statute, it uses the federal rules,” he said.

“Tom Koutsantonis believes the SA Bill will reduce uncertainty but it will actually create uncertainty.”

Minter Ellison partner Josh Simons said franchised businesses had expressed concern the government was “sneaking” the changes through without discussing franchise-specific issues.

“If passed by Parliament, the Bill will enable the small business commissioner to take action to enforce `prescribed industry codes’ and to seek civil penalties of up to $50,000 for anyone who breaches such a code,” he said.

“The Government has said that codes such as the Franchising Code of Conduct will be prescribed, notwithstanding that this is a Commonwealth code.”

Mr Simons expressed a warning that “we will then have the extraordinary situation where the ACCC will enforce the Franchising Code as a commonwealth prescribed industry code, and the small business commissioner will enforce the Franchising Code as an SA prescribed industry code.”

Article from The Advertiser, August 2011.