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Thursday, 21 June 2007
Page: 167


Mr RANDALL (12:29 PM) —I would like to bring to the attention of the chamber what may well be a very sad incidence of a contravention of section 51AC of the Trade Practices Act, which refers to unconscionable conduct in business transactions. I was absolutely heart rendered when I had two constituents come to my office about a fortnight ago to tell me about their very bad experience with a Lenard’s chicken franchise. These two ladies have now brought to my attention others who may well have been affected by potentially unconscionable conduct. Both of these ladies—Rochelle Bailey, a former franchisee of Lenard’s Mirrabooka, and Leanne McCullagh, who had the Lenard’s franchise in Livingston, which is in my electorate—are my constituents. They have also brought to my attention, and I have had contact from, Sue Brown, an ex-franchisee of Lenard’s in Bull Creek.

What appears to be happening in this country is that some unscrupulous people involved as master franchisees are taking the opportunity to send these people to the wall, because there is more profit and more money in sending a business to the wall, reselling it and starting it up again—it is quick turnover. John Farrell, from the National Federation of Independent Businesses, has brought to my attention that it appears the regular conduct in a number of franchisors’ businesses is that they look at about eight per cent per year to turnover, which brings them in millions and millions of dollars. This has nothing to do with any partisan issue in parliament, because we are supported by both sides of parliament on this issue—for example, Graham Edwards attended a meeting with me last Thursday, which Ruth Webber organised from Western Australia. Throughout our electorates across this country we are finding people who may well have been deliberately sent to the wall by these people.

Essentially, they get them in—for $300,000, in the case of Lenard’s—and then they fail to assist in any training, in any business management. Many of these people who come in are simply people off the street or who have been in other professions and who think they are going to make a business out of a franchise. They do not receive any business or training help, or what is provided is limited. In fact, there is evidence that, in collusion with shopping centres and others—in the case of Lenard’s, with Steggles support providing on-time and proper chicken meat—there is also something that is less than desirable, which has the net effect of sending these businesses to the wall. In this case one of my constituents—Leanne McCullagh, who I have already mentioned—was abused by the master franchisor in Western Australia, a gentleman called Gerrit Heijne, who used to go to her store and stand there and, in front of their customers and staff, abuse them and interfere with the running of the store. I am hoping to meet with this fellow in Perth soon.

I wrote a letter to Lenard’s. Quite rightly the CEO, Mr Bruce Myers, responded to me and said that he will meet me in Perth between the 25th and the 27th. I will meet him, as long as he meets with these two constituents of mine and Mr Heijne. I want to know what they are going to do to help these people retrieve their money out of the business. They have had to walk away from these businesses. They have no legal assistance, because they are broke—they have lost their houses over it. These people went and got a double mortgage to go into these businesses. Yes, a lot of people might say, ‘Look, they might have been no good at business,’ but where was their support? That is the old argument: if they are no good at business, of course it will fall over. But it is too coincidental. Too many of these businesses are falling over, and they pick them up, repackage them and resell them for $300,000, and make an enormous amount of money out of it. I am going to pursue this matter along with other members of parliament to get justice for the people who are getting caught up in what could be a potential scam on behalf of major franchisors and their operatives in each state as master franchisees. (Time expired)