Franchising code “deficient and ineffective”

Donut King owner Retail Food Group has been embroiled in scandal.

Donut King owner Retail Food Group has been embroiled in scandal.

A union representing retail and fast food workers says it will tell a Senate inquiry in Brisbane that the current regulations surrounding franchising are “deficient and ineffective”.

The Shop, Distributive and Allied Employees Association will address the inquiry on Friday with employment lawyers Maurice Blackburn.

SDA national secretary Gerard Dwyer says the Franchising Code of Conduct has many deficiencies.

“The current code makes absolutely no attempt to ensure that franchisors and franchisees abide by workplace laws,” Mr Dwyer said in a statement.

“As a result, we have seen appalling examples of systemic wage theft and exploitation of thousands of workers by major companies such as 7-Eleven, Caltex and Subway.”

Mr Dwyer said migrant workers, who fear being reported to immigration and deported, were particularly vulnerable and poorly served by the code.

“Proceedings to recover unpaid wages in the current system are complex, time-consuming and costly,” he said.

The code also lets down franchisees, as it doesn’t require franchise models to be structured in a financially sustainable manner, he said.

“It’s clear that many individuals enter into franchise arrangements without having a clear understanding of all that’s required.

“It is virtually impossible for many franchise holders to operate a successful business without ‘cutting corners’ such as engaging in wage theft.”

Mr Dwyer will recommend a range of changes to the code, including holding franchisors to account.

“Liability for breaches of the Fair Work Act by franchisees should extend to the franchisor,” he said.

Comments

2 comments

  1. Geoff posted on June 8, 2018

    Interesting and hopefully there will be some real recommendations once the Parliamentary Enquiry finishes, however a question regarding the last comment. Wasn't the recent Vulnerable Workers Act which passed sued to make the Franchisor accountable for the Franchisee actions in relation deficient business practices such as wage theft?

  2. Mark posted on June 8, 2018

    Undoubtedly, there are many franchisors that could be doing a better job. However, I NEVER see any commentary about what kind of due diligence anyone does prior to investing. How many people by existing non-franchise businesses and fail? How many start ups fail? Next to those numbers, franchising comes up well in front, and if people spent more time researching and less trying to dodge responsibility for their own decisions, we would have a very different landscape out there.

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