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Monday, 1 December 2003
Page: 23328


Mr FITZGIBBON (3:58 PM) —I am happy to second the motion. People will not be surprised by my preparedness to do so, because, as a former shadow minister for small business, I am more than well aware of the importance of the franchising sector, its contribution to the Australian economy and also, of course, the challenges people who enter into franchise agreements face in the real business world. As the services sector continues to grow as a share of our economy so too will more and more people seek to enter the small business world by virtue of the franchising system.

Franchising is a wonderful concept. It allows those who aspire to small business enterprise to fulfil their dream by reducing capital requirements, reducing risk and providing brand strength and business skills development programs. But, of course, for the franchisee, the leap of faith in the franchisor is not always without its risks. From the very day a franchisee signs the dotted line, his or her fate rests largely with the integrity, morality, skills and commitment of the other party to the bargain.

As in many other areas of life, the power of the parties to that bargain is far from equal, and there will always be people who are vulnerable to the stronger party to that bargain. That is why we have a mandatory franchising code—a code, I should say, which was voluntary when it was first given birth to but which, after some pressure from the industry, the government agreed to make mandatory. That code is one which Labor supports. It provides certainty for franchisees in particular as well as a low-cost, less formal and less intimidating dispute resolution mechanism.

The code is a work in progress, and it will continue to evolve. Hopefully, in the medium to long term it will prove to be a most effective regulatory tool. But there will always be areas of the economy in which a franchising code will be insufficient, and one of the obvious areas, which I continually have some exposure to, is petrol retailing. Petrol retailing franchisees in particular at the moment face great challenges. Many of those challenges are brought on by the emerging redevelopment of the petroleum retailing sector. I refer to the merger agreements, or arrangements, between Caltex and Woolworths and between Shell and Coles. This will result in a significant restructuring of that retailing industry. In fact, it is probably the most significant restructuring in the history of petroleum retailing—certainly the most significant restructuring since the introduction of the Petroleum Retail Marketing Sites Act 1980 and the Petroleum Retail Marketing Franchise Act 1980.

The very fact that we have a franchising act within petroleum retailing in itself shows that governments in the past have identified this as a specific area in which the relationship between the franchisor and the franchisee is not equal and where additional protection should be afforded. There could be no more stark example of that than the situation at the moment with respect to the Caltex deal. Recently, to my great distress and the distress of many Caltex franchisees, the Caltex company sent a memo to its lower managers, talking about the joint venture arrangements and giving them certain instructions in terms of their dealings with Caltex franchisees, who are living in fear as to whether or not they are going to be part of this new joint venture. I seek leave to table that memo, because I do not have time to read it.

Leave granted.


Mr FITZGIBBON —It is generally known as the `FUD memo', because it asks its Caltex managers to use `fear', `uncertainty' and `doubt' as tools when dealing with Caltex franchisees. There could be no more stark example of abusive power on the behalf of a franchisor. I join with members of the government in expressing my concern about those issues generally—(Time expired)