WA backbencher, Member for Southern River, Peter Abetz, has recently introduced a bill into parliament which could potentially have a serious negative effect on franchising in Western Australia initially and then the rest of the country.

Having a new State law in a sector where we are nationally regulated is a bad idea.

The Bill seeks to:

Introduce a new definition of ‘good faith behaviour’ – with good faith being defined as “to act fairly, honestly, reasonably and co-operatively”. This is a very broad and subjective definition and may bring ambiguity to the relationship between Franchisees and Franchisors. In particular, the requirement to act in a “co-operative” manner will be tested in trying times and under the process of terminating an agreement may become too easy to suggest that a party is not ‘co-operating’

Proposes penalties for personal injury.  This has the potential to expose franchisors to damages of up to $100,000 if a franchisee injures themselves in the conduct of their business. This may also see a rise in insurance premiums which will inevitably passed onto the consumer to fund.

Introduce a requirement that the franchisor is obliged to grant a new term of a franchise agreement at the end of the term.

Be extra-territorial. In essence this means that if the franchisor is registered in Western Australia, the Act will apply to all franchise agreements throughout Australia. This will stifle new franchise systems in the West and may even cause some Eastern States and/ or International Franchise networks to rate WA as a ‘high’ risk to expand into.

The Franchise Council of Australia (FCA) is looking to lobby the WA` state MP’s and overturn this Bill. For more information or a copy of the Bill please contact Mark Fernandez on mark@bda-online.com.au or visit our website; www.bda-online.com.au