SENATOR’S STRONG WORDS ON FRANCHISING

NSW Labor Senator, Deborah O’Neill, who was a strong advocate for Dealers in her role on the Senate Committee inquiry into Holden, joined AADA CEO, James Voortman, in conversation as part of the AADA Policy Update and Industry Overview on the first morning of the Moving Forward online event.

Senator O’Neill was also a member of the Joint Parliamentary Committee into Franchising, and shared her views on franchising in Australia, including assurances that small businesses would be safer in the franchise system than outside it.

“What we’ve been finding out over the past few years is how disappointing the experience is for so many Australians. Not in every franchise situation but in far too many,” she said.

“We had that long inquiry, which resulted in the 2018 Fairness in Franchising report, the unanimous report. We were able to deliver a consensus report about very significant change that needs to happen. There’s many, many issues, but the really crunchy point is when it gets to the end. It’s like when you fall in love, full of hope and promise, you get married, you sign up, just like an agreement for a franchise, but what about when things don’t turn out so well and you’re at that divorce stage?

“And that’s what Australians are finding out: it’s at that point, that critical point of separation that basically our system has been failing for a very long time, and it continues to fail. And your members have seen the fruits of the government not doing anything. When you sit on your hands and you say, ‘just let the market do its thing’, that can be great in terms of enabling business and innovation, but where there is a market failure, a government that fails to act leaves an entire industry at the whim of a more significant player. And we’ve seen power operating in the most corrupting way, and the most devastating way in too many franchises, including the car sector.”
Mr Voortman said franchisees know all the power resides with the franchisor, and hence are reluctant to speak out.

“How do we go about solving that and empowering them to speak up without fear of retribution?” he asked.

Senator O’Neill responded that we have to change the system.

“There have to be points at which people can engage and say, ‘I’ve got a problem’, and we need to get a resolution to these problems, but what’s happened is over time, the contracts that have been drawn up have hit a point where unconscionable contract terms are embedded,” she said.

“We had evidence early on in our inquiries to say that some of these contracts were written in such a way that it would be impossible to actually even take an unconscionable contract action. So, it’s established its fortress of protection from people coming forward, so it’s not going to be an easy thing. That’s why people can’t just do it themselves, it will require government.”

Describing as “disingenuous” Franchising Australia’s claim that it represented both sides of the franchise relationship, Senator O’Neill said franchisees had been without a “structural” voice for too long.

“Their voice has been heard. It’s been heard by senators of both major political parties,” she said.

Senator O’Neill said the Senate Committee had come up with a solution, but the federal Coalition government had failed to implement it.

“They know what’s going on. They have been advised, they’ve been given a road map of key areas that need a response, and your sector, more than any others, has seen this government step away from taking action when there is clearly market failure,” she said.

“And that’s why I won’t let this rest. I think about the stories that people have shared with me. I know what it means when businesses fail. I know what it means for your members, who have invested decades, in family businesses over generations, invested in the area that they live in, have created jobs, have looked after the local football club, have done great things in the community, as well as made a profit for themselves – and good on them – had the great life that that gives, but also all of the people that they’ve employed.

“All of that matters. The government basically assign no currency to that, and they made their choices: they played the game all the way to the 30th of June for the 185 Holden Dealers, they kept making all the right noises, they got all the headlines and the media that they wanted, and when it came to action and outcomes for good Australian business people, they failed, and we haven’t heard boo from them since.”

Federal Assistant Treasurer, Michael Sukkar, sent a video message, telling the convention “the importance of your industry to the economy has never been more evident, as we move to the other side of the pandemic”.

“The Morrison government is committed to supporting automotive Dealers and all industries through to the other side of this pandemic,” he said, outlining tax incentives and offsets to help businesses.

“Australia’s automotive Dealers understand the importance of credit. You deal with it every day in your showrooms, and as part of the Morrison government’s economic recovery plan, we’re reducing the cost and the time it takes businesses and consumers to access credit,” he said.

Mr Voortman said AADA would continue to form strong relationships with both sides of politics in order to continue strong advocacy for franchised automotive Dealers.

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