Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I rise today to bring to the attention of the parliament a subject that has been raised before in parliament but which still continues to be a problem in my electorate of Swan, in Western Australia, as well as in other states of Australia—that is, franchising. Last month three franchise owners in Western Australia came to my electorate office in a state of distress as they were on the verge of financial ruin after purchasing and continuing to run a franchise business from a company called Michel’s Patisserie. They came to my office as a last resort, feeling they had nowhere else to turn for help. They are in a state of despair and stand to lose all they have achieved in their working lives, including their family homes, and they may have to endure the embarrassment of bankruptcy. These are not wealthy Australians by any means but middle-class, hardworking Australians who have placed their homes and financial lives at risk on a franchise business model. After meeting with them and seeing the documentation for the proposal of that model, I was appalled that they had been convinced by the franchisor to purchase this model. I was soon to learn that at least five out of the 16 franchisees in WA are in the same position. I learnt as recently as yesterday that there are at least another 10 in Queensland in the same position.

Soon after meeting with the franchisees I, with Luke Simpkins, the member for Cowan, and Don Randall, the member for Canning, had a meeting with John Martin and Sam Di Scerni from the ACCC to discuss franchising and churning. I have now sought a further meeting with John Martin and I have also written to the chairman of the company that owns Michel’s Patisserie seeking a meeting. An article appeared in the Courier Mail on 10 May entitled ‘Pie in the sky: not everyone makes money buying a franchise’. The article was written by Des Houghton. The article was primarily about struggling and pressured franchisees of Michel’s Patisserie and how they could not make money. The article also stated that only one franchisee had terminated its agreement in the past three years. Michel’s Patisserie seemed to be the only ones convinced that there is money to be made in their model. The article also failed to state how many franchise agreements had been terminated by the franchisor and how many franchisees had to leave with only a token payment to walk away with—and then the franchise was resold, to the benefit of the franchisor.

Graeme Samuel, Chairman of the ACCC, told a recent federal parliamentary inquiry there were grave concerns with some aspects of franchising. Mr Samuel also told the hearing that action could be taken through section 51AC of the Trade Practices Act, which relates to unconscionable conduct. I and three of my parliamentary colleagues, who have constituents with similar problems, will continue to highlight franchising in Australia until we can get a satisfactory result for the franchisees. I urge the new minister for small business, the Hon. Dr Craig Emerson, to join us in this pursuit to assist Australian small businesses who are operating franchises and to review current legislation on franchising and the protection of franchisees.