Inquiry to probe troubled franchise sector

A parliamentary inquiry will investigate the franchise sector, following a string of scandals to hit major operators in the $170 billion sector.

A federal parliamentary inquiry into the nation's scandal-ridden franchise sector will delve into brand owners' treatment of franchisees.

Nationals Senator John Williams pushed for the investigation of the $170 billion franchise sector after speaking to franchisees who lost everything to what he called "questionable" actions by their master franchisor.

Among those Senator Williams met were a Chinese couple with twin boys who came to Australia to run a business.

"They worked hard and were doing okay and then the franchisor, which owned another brand, opened a store in the same building in Sydney," Senator Williams told AAP on Friday.

"They both went broke because there wasn't enough market in the one place to have two similar stores."

The parliamentary committee hearing comes after a string of scandals to hit major franchisors, including Donut King owner Retail Food Group, Domino's Pizza, Caltex and 7-Eleven.

Senator Williams said other stories he had heard included people being sold a franchise for a hefty price only to discover the store was struggling and that they were sold a false dream.

His motion to establish the inquiry passed the Senate unopposed on Thursday.

He said the industry's code of conduct and handling of contracts and disputes will be investigated.

"There are problems in the industry even though there are many thousands of franchises in Australia that work well," Senator Williams said.

The inquiry is calling for submissions from franchisees and franchisors by May 4 and plans to report by September 30.

The Parliamentary Joint Committee on Corporations and Financial Services is conducting the inquiry.

Source AAP

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