Why the Franchising Code needs a fixed review period

By Ben Kearney | 04 Jun 2021 View comments

The ability to predict and plan are vital elements in any successful business, no matter how big or small. Unfortunately for many franchisors and franchisees, the current system of ad-hoc Franchising Code reviews is the very last thing that businesses can plan for. 

Our sector has become extremely frustrated with the uncertainty around the impromptu nature of the Franchising Code reviews, which seem to pop up at random, unpredictable intervals.

The industry is faced with long, drawn-out reviews that often seem to go round in circles with seemingly no conclusion. Stakeholders are left frustrated, with a sense that the system is out of their control – which does nothing to improve stakeholder relationships.

Despite the obvious flaws in the current system, it’s vital that we, as an industry, acknowledge that our sector is facing constant upheaval and disruption. Reasonably spaced fixed reviews, with a regular, consistent date will help the situation by removing the current ambiguity and replacing it with a reliable certainty that can be built into business planning over the long term. 

Franchising Code needs a fixed review period for certainty

Three-yearly reviews would act as a sensible middle ground, one that provides better surety for businesses, providing them with the ability to plan for the future.

Ideally, three-yearly reviews should be combined with set timelines that mandate when a review will begin and end, giving businesses the flexibility and time they need to adjust to a rapidly changing sector.

This would underpin the process for all parties, making the entire system fairer, clearer, and better understood by all.

As it stands, most reviews are usually driven by larger political motivations, complaints or crises. As such, they can catch stakeholders off-guard at a time when the industry landscape is already looking uncertain. Stakeholders can rapidly become defensive and combative, unravelling very quickly into counterproductive, anger-filled spirals.

When this occurs the most important stakeholders – namely, the franchisors and franchisees – lose control of the outcomes.

Fixed reviews embedded in the Franchising Code of Conduct would ensure all stakeholders could prepare properly for any changes, which should help turn the reviews from defensive, combative situations to more productive experiences for all involved. 

Fixed reviews would allow stakeholders the opportunity to work together in advance of the review, in order to put together a list of franchising issues and recommended solutions based on compromised or agreed on positions.

Of course, in cases where agreement can’t be reached, both parties would be allowed the time and space to present their respective cases – just as they do under the current system.

Franchising Code needs a fixed review period so stakeholders can fix issues

Under the current ad-hoc review program (or should I say, lack of one), the issues to be reviewed are often imposed on stakeholders by the government of the day or by various regulators.

On the other hand, a more planned approach might help the industry conduct some self-diagnosis and be prepared with remedies that all stakeholders could agree on.

As with any programmed review process, it’s vital that stakeholders should be encouraged to work together between reviews to resolve any emerging issues before the next review.

As well as improving overall business relations, this may simultaneously help guard against unwanted solutions being imposed on them. In fact, regulators such as the ACCC could facilitate these consultations through their current franchise group – of which ALNA is a member.

Just as the Commission Review Mechanism was established in the most recent Victorian Lottery licence, the Franchising Code of Conduct review process should require all parties to act in good faith, with the interests of all stakeholders in mind.

After the year we’ve just had, a little more certainty can only be a good thing.