Luke Foley's plan to make firms granting name franchise licenses available to entrepreneurs responsible for any shortfall in the pay paid to their employees would probably see the end of this business model in the Australian workplace.
Franchising has allowed thousands of small operators to launch their own business and prosper because a winning formulae is being duplicated across the nation. Customers are attracted because the trade name is nationally known and respected and the franchisee is guided to duplicate the display, service and signage of the original enterprise. It has the advantage that national advertising ensures a steady customer stream and that reduces the business risk.
Franchise arrangements are widespread in every shopping centre and include businesses selling international brands of petrol, bakeries and of course the many fast food outlets that include McDonalds. In more recent times, the services offered have widened. Today we find franchise operators cutting lawns and servicing cars.
They range from spacious operations with multi staff to Mum and Pop type businesses tucked away in arcades but these are people who have taken an opportunity to be self employed. In recent times, there have been prosecutions where casual staff working for franchise chains have been subjected to exploitive hours and paid less than the gazetted hourly rate. In many cases, overtime payments have been ignored.
Foley is proposing to make the firm owning the franchise responsible for all aspects of pay - and even talking of prison terms for what is really " wage theft ". Quite obviously, Luke Foley simply does not understand the basics of business and the sheer impracticability of a franchise owner being asked to take legal responsibility for businesses that they neither own or directly control.
Not all who take a franchise are competent business people. Some are over confident - and some are plain lazy and fail to find favour with the public, and they are no less responsible for paying the correct wages to employees as anyone else starting a small business. The fact that they are running a franchise has nothing to do with it.
As we have seen, the shortage of jobs has many people receiving the dole welcome cash in hand arrangements far less than the stipulated wage and we have always had a burgeoning black economy in this country. Unscrupulous employers sometimes take advantage of such conditions - and are open to the full force of the law to atone for such law breaches.
Should Foley ever be able to implement his aim he would impose an impossible condition on the franchise system - and it would quickly evaporate. Without it, there would be massive gaps in the business community that serves us so well today.
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