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Tuesday, 9 October 1984
Page: 1477


Senator BUTTON (Minister for Industry and Commerce)(5.30) —by leave-I move:

(1) Page 4, clause 4, after proposed sub-section 6 (1D) insert the following sub-section:

' ''(1DA) Where-

(a) a corporation operated premises as a retail site on a day (in this sub- section referred to as the 'relevant day'), being 1 August 1984 or a day after that date and before 1 January 1985;

(b) if a franchise agreement in relation to which the premises were marketing premises was in effect immediately before the relevant day-the agreement did not continue in effect, and the franchisor in relation to the agreement was not required by this Act to renew the agreement, on or after that day; and

(c) the premises have been operated as a retail site by the corporation or a related corporation on every day after the relevant day and before 1 January 1985, other than a particular day referred to in sub-section 11 (9) of the Petroleum Retail Marketing Sites Act 1980,

then, in relation to any franchise agreement (whether entered into before, on or after 1 January 1985) in relation to which the premises are the marketing premises, this Act does not apply at any time before the end of the first month during which neither the corporation nor a related corporation operates the premises as a retail site.'.

(2) Page 4, and 5, clause 4, proposed paragraphs 6 (1E) (a) and (b), line 42 ( page 4) to lines 7 (page 5), leave out the proposed paragraphs, insert the following paragraphs:

'(a) a franchise agreement (in this sub-section referred to as the ''relevant agreement'') is entered into in relation to marketing premises on a day (in this sub-section referred to as the ''relevant day''), being 1 January 1985 or a later day;

(b) if a franchise agreement in relation to which the premises were marketing premises was in effect immediately before the relevant day-the agreement did not continue in effect, and the franchisor in relation to the agreement was not required by this Act to renew the agreement, on or after that day; and'.

(3) Page 5, clause 4, proposed paragraph 6 (1E) (c), line 8, leave out 'the franchisor has served on the franchisee', substitute 'the franchisor in relation to the relevant agreement has served on the franchisee in relation to that agreement'.

(4) Page 5, clause 4, proposed sub-section 6 (1E), line 19, before 'agreement', insert 'relevant'.

(5) Page 5, clause 4, proposed sub-section 6 (1F), lines 22 to 24, leave out, the proposed sub-section, insert the following sub-section:

' ''(1F) Expressions used in sub-sections (1D), (1DA) and (1E) have the same respective meanings as in the Petroleum Retail Marketing Sites Act 1980, disregarding sub-section 7 (3) of that Act.'.

(6) Page 13, clause 16, proposed paragraph 17 (5) (c), lines 3 and 4, leave out the proposed paragraph, insert the following paragraph:

'(c) the lease is granted as described in sub-paragraph (1) (d) (i) or the disposition occurs as described in sub-paragraph (1) (d) (ii), as the case may be;'.

(7) Page 13, clause 16, proposed sub-section 17 (6), lines 8 and 9, leave out ' no agreement of a kind referred to in paragraph (1) (d) has been entered into', insert 'the lease has not been granted as described in sub-paragraph (1) (d) (i) or the disposition has not occurred as described in sub-paragraph (1) (d) (ii), as the case may be'.

(8) Page 14, clause 16, proposed paragraph 17A (7) (c), line 33, before 'the court is satisfied', insert 'except where a ground so established is a ground referred to in paragraph 17 (1) (d),'.

(9) Page 14, clause 16, proposed sub-section 17A (8), line 40, at end of proposed sub-section, add '(not being a ground referred to in paragraph 17 (1) ( d))'.

(10) Page 23, paragraph 25 (6) (a), line 35, leave out 'sub-section 6 (1)', insert 'section 6'.

(11) Page 23, paragraph 25 (6) (c), line 41, leave out 'sub-section 6 (1)', insert 'section 6'.

(12) Page 24, sub-clause 25 (7), line 11, leave out 'sub-section 6 (1)', insert 'section 6'.

(13) Page 24, paragraph 25 (8) (b), line 20, leave out 'sub-section 6 (1)', insert 'section 6'.

I understand that there are no other amendments to this Bill. The amendments to clause 4 are designed effectively to remove a five months suspension in the general exclusion of franchise Act application to sites operated directly by companies under the Petroleum Retail Marketing Sites Act. I clarify that the exclusion applies not only to new marketing premises but also to existing marketing premises which legitimately change from a lessee-franchisee operation to a direct company operation.

The five-month suspension period was originally proposed to guard against possible abuse of the new franchise Act exemption to the detriment of lessee- franchisees. However, following consultations with members of the petroleum industry after the introduction of the Bill in this place on 22 August 1984, advice was received from the industry that premises were likely to commence as direct company operations during the suspension period. The purpose of the original legislation was therefore likely to be aborted. The continuation of the suspension therefore would unnecessarily disadvantage legitimate commercial transactions proposed by franchisors during the period and would not be consistent with the Government's general policy that both Acts should not be capable of applying concurrently to the same marketing premises. Similarly, the restriction of the general exclusion I mentioned earlier to new premises would not be consistent with the Government's policy. However, both amendments will ensure that the exclusion of franchise Act application to direct company operated sites will not be capable of abuse by franchisors to the detriment of lessee-franchisees.

The amendments to clause 16 are proposed to correct a potential loophole in one of the grounds for non-renewal embodied in the clause. The potential loophole was identified by members of the petroleum industry following the introduction of the Bill on 22 August. As presently worded, the relevant provision in the clause would appear to allow a franchisor to enter into an agreement of lease or sale within the prescribed six-month period yet the actual lease or sale might not occur until well after that period. Such an occurrence might frustrate a franchisee's legitimate expectation of franchise renewal and would go beyond the Government's intention to assist the orderly rationalisation of retail outlets when it is commercially sound to do so. The amendments now proposed to clause 16 of this Bill will ensure that a franchisor will have only an unconditional ground for the non-renewal of franchise agreements where the lease is actually granted or the sale actually occurs within six months of the date of expiry of a franchise agreement. The amendments to clause 25 are technical drafting changes to the proposed transitional provisions of the Bill and are consequent upon the amendment which I have moved to clause 4.