Print franchise groups are working through proposed new laws in wake of underpayment scandals, and they say changes are damaging to the franchisor franchisee relationship and not necessary.
The new bill dealing with franchise laws, the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Bill) is being put forward by the Turnbull government, with critics saying it could mean the end of the franchise model in Australia, which is a $150bn sector and includes several large print groups.
It aims to deal with exploitative acts by franchise owners by attributing more responsibility to franchisers to ensure their franchisees are not doing anything illegal. The bill follows the massive 7-Eleven scandal in which workers throughout the country were systematically underpaid.
However franchise groups say it places undue prejudice on the franchisor, and says franchisees will be hit hard with additional compliance costs.
Evan Foster, national director of the United Franchise Group, which features Signarama on its roster says, “I think it unfairly charges franchise systems with an economy-wide issue. The scope of some of the language like ‘steps could have taken’ or ‘reasonably known’ is too broad. It might stop people from going down the franchise paths in the future. We have some other franchises we wanted to bring from the US and now we are wondering if we should bring them to Australia.”
The print industry has its share of franchises, with Snap, MBE, Kwik Kopy, Worldwide Online, EmbroiderMe, Signarama, and Signwave among others that stand to be affected by the law changes.
The bill changes the law’s language, making it possible for franchises to face fines of $54,000 for their franchisee's underpayment offences when ‘they knew or ought reasonably to have known of the contravention and failed to take reasonable steps to prevent them’. It also gives more power to the Fair Work Commission to gather evidence to prosecute franchises for wrongdoing. Issues with the broadness of the language have been raised by franchise bodies.
Foster says, “It is worrying they are going down this path, as I believe the law is working. The Yogurberry case proved the law works, just like the 7-Eleven case,” Foster says.
In the Fair Work Ombudsman v Yogurberry World Square case, the Federal Court ordered penalties totalling $146,000 against three corporate respondents who were part of a related group of companies within the Yogurberry Group, a frozen yoghurt brand with 23 stores throughout Sydney. The penalties were for underpayment of staff, and failure to keep proper payment records.
The Franchise Council of Australia (FCA) has argued against some of the law changes, and been criticised for doing so, says Foster.
“We think the sector is incredibly strong in Australia, and the leadership looks after the interests of the sector.
“Some journalists have been besmirching the franchise council, saying that we do not want to protect vulnerable workers. That is not the case, we want them to be protected.
“Through the leadership of the FCA, they are doing their best for the franchising sector to make changes to franchising sector law before it is finalised.”
In a statement, the FCA notes that, “No one in the franchise community wants to see an employee underpaid or knowingly taken advantage of, in a franchise setting or any other kind of workplace.
“The FCA welcomes the Government’s boost to the resources available to the Fair Work Ombudsman, increased penalties for Fair Work Act breaches and enhancing the powers of the FWO to collect evidence. There were FCA recommendations to a Senate Inquiry.”
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