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New register for franchise operators

Written on the 13 June 2014

The Age, My Small Business section

While the general economic performance of Australian franchising is positive, the sector is still vulnerable to reports and often distorted perceptions about the credibility of the franchising business model.

Franchising is one of Australia’s most robust and successful sectors, boasting over 1,100 franchise systems, 70,000 franchised businesses and a contribution to gross domestic product of $131 billion annually. However, the cloud of uncertainty that persists over franchising because of a small but vocal minority who disregard the Franchising Code of Conduct continues to impact the wider sector and unfortunately there has been limited independent and reliable information available to disperse it.  

This week Federal Small Business Minister Bruce Billson officially launched Australia’s first registry for franchise operators in front of founders and leaders of prominent Australian franchise brands, senior bankers, professional advisors, sector regulators and senior officers of the Franchise Council of Australia (FCA) – all of whom have directly or indirectly driven the demand for a franchise registry.  In fact, such a concept has long been mooted including parliamentary inquiries into franchising.

The Franchise Registry requires franchise brands to provide a current Disclosure Document and current Franchise Agreement each year, and also to confirm these documents comply with the Franchising Code of Conduct, in order to register. It’s this industry leadership and practice of transparency that will enhance the credibility of Australian franchising, improve franchisor compliance and give greater confidence to those looking to invest in franchising.

We were delighted to see Minister Billson support the initiative and its ability to aid decision-making in the franchising sector. The Federal Government has long had an appetite for better indicators of stability in franchising and the registry will be able to generate more meaningful data that they can use to enhance their support of the sector. The ACCC can also use more detailed information on the sector to focus resources on the real issues in franchising and justify its legislative forbearance.

With some of the lowest rates of franchisee disputes in the world, the FCA will also be able to use the broad and insightful data on the sector to put issues into context by highlighting credibility and strength in Australian franchising.

As a former finance lender in franchising, I know the registry will also improve a franchise brand’s finance lending potential by evidencing their commitment to closing the current information gaps that hinder the identification and assessment of key lending risks, helping both franchisees and franchisors access finance.

This is a real opportunity for franchise brands to protect and enhance the reputation of their industry and disperse the tainted views of franchising. It’s the opportunity to bridge the information gap in the sector and make it easier for potential franchisees looking to invest in franchising, and their advisors, to identify genuine and responsible franchise brands.  And fundamentally it’s about raising the standards and transparency in a sector that has grown into such a significant part of the Australian economy.

Darryn McAuliffe is CEO of objective information and analysis provider FRANdata, which administers The Franchise Registry

Read on source website.

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