Franchising needs to self-regulate, franchisors told

Now is the time for the franchising sector to face up to its responsibilities, take action over substantial concerns, and self-regulate.

That’s the message that is coming out of the first day of the National Franchise Convention in Melbourne.

Addressing her first national conference as CEO of Franchise Council of Australia Mary Aldred reflected on the parliamentary inquiry, which is set to hand down its recommendations on 6 December 2018.

“We expect the report to be damning,” she told the delegates. Once the report is released it will be up to the minister at the time to respond but Aldred suggested the sector should take early action to self-regulate.

“The FCA has the opportunity to identify the issues and be proactive,” she said.

Many of the recommendations the peak body has already submitted to the inquiry could be implemented now, a process that would only serve to emphasise the sector’s commitment to fix problems, and help to stave off harsh regulatory responses from government, she suggested.

The former premier of Victoria, the Hon. Jeff Kennett AC, echoed this vew in his keynote speech at the convention.

“The first responsibility of business is good governance,” he said. “You have to heal yourself very quickly,” he told the franchising community, stressing the importance of the only thing common across brand, individuals and sectors – reputation.

The first day of the convention followed a full day’s legal symposium, in which transparency and good faith were issues raised in a number of sessions.

In a session looking at the possible outcomes of the parliamentary inquiry, Alan Wein,the mediator and lawyer who headed up the Wein Review of the Franchising Code in 2013, suggested there are no substantial issues that would require a significant overhaul of the code.

“Franchising is just a reflection of what’s occurring in the economic landscape,” he said in the panel discussion. But he did point to a concern about franchisors not fixing their problems.

“Is it fair to sell to franchisees if the model is in decay?” he asked.

Also on the panel, Franchise Relationships Institute founder Greg Nathan pointed to a drop in optimism across franchisees, with just 55 per cent now feeling optimistic about their business.

Lack of trust and transparency leads to a negative culture, a decline in sales and profitability, he said.

Topics of franchisee profitability, ingredients for success and Bakers Delight’s tips for growth and renewal are also on the agenda for the first day.

The National Franchise Convention closes on Tuesday 16 October.