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House of Assembly - Fifty-First Parliament, Second Session (51-2)
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Parliamentary Committees

ECONOMIC AND FINANCE COMMITTEE: FRANCHISES

Mr KOUTSANTONIS (West Torrens) (11:02): I move:

That the 65th report of the committee entitled 'Franchises' be noted.

Franchises are one of the fastest growing sectors of the Australian economy, expanding at about 11 per cent per year and representing about 4 per cent of GDP. Most people will have had the experience of purchasing something from a franchise and, in some of the larger shopping centres, it is increasingly difficult to find outlets that are not part of one franchise chain or another.

The attraction of franchising for those often small mum and dad investors who become involved as franchisees is a desire to operate and own a successful small business, a desire that beats inside many of us. Franchising speaks to these ambitions and says, 'If you bring the investment and the enthusiasm, we will provide you with a system, the support and the capacity to make your business succeed.' The truth is that, sometimes, enthusiasm and hard work are not enough and, even more disturbingly, cannot be enough given the agreements to which some franchisees find themselves a party.

That is not to say (the committee and its witnesses were at pains to make this observation) that all franchises—and, indeed, the franchise system per se—are without merit or are not capable of producing an excellent product with all parties satisfied that their contribution is adequately rewarded—far from it. However, the truth revealed by the committee's inquiry is that too often a franchise agreement made with a promise of due reward for investment and effort ends with devastating financial and personal consequences that fall disproportionately on franchisees.

A franchise can be defined as a continuing commercial enterprise whereby the franchisor grants the franchisee the right to conduct a separate business which is indelibly and publicly linked with the identity of the franchisor. Essentially, a franchisee is buying the right to operate under the name and system established by the franchisor. As a result, the franchisor has the capacity (and rightly so) to protect the integrity and reputation of their brand through the terms of the contract agreed by the franchisee. As the committee discovered, this contract forms the hub around which revolve most of the critical problems afflicting the franchisee sector.

The committee heard some truly disturbing evidence from people who entered into these agreements in good faith and then found themselves in financial positions that were not and, indeed, never seemed designed to be sustainable. It is also true to say, however, that many people did not, or perceived themselves as unable to, obtain adequate financial and legal advice going into these arrangements, and they paid the price for it.

Yet, even in these latter instances, the committee found flaws in the current regulatory regime which, if addressed properly, could provide real assistance to those seeking to undertake all the necessary due diligence even if, as is often the case, they lacked experience in the business world. The current regulatory regime for franchises is mainly focused at the commonwealth level through the Franchising Code of Conduct, which operates under the authority of the Trade Practices Act. There are also some interfaces with the state legislative and regulatory regimes.

The committee's investigations and recommendations apply across the jurisdictional divide and are designed to provide tangible changes to the state sphere where possible, while encouraging commonwealth reform through ministerial representation at national councils and the like. I will not recount to the house a detailed description of all the evidence received, except to say that the inquiry was extensively and enthusiastically supported by large sections of the franchise sector.

The committee received about 50 individual submissions and conducted 10 hearings, many of which were videoconferences with interstate experts from the academic and business sector. The range of problems canvassed by the inquiry can perhaps best be described by looking at the broad sweep of the committee's recommendations and their focus on the provision of relevant information to potential franchisees, the codification of their rights and the encouragement of a more active role on the part of the Australian Competition and Consumer Commission (ACCC). These recommendations include:

compulsory federal registration with the ACCC of all disclosure documents;

full disclosure of franchisor financial reports, with no exceptions;

full disclosure to potential franchisees of the risks of failure;

publication of the names of those who persistently breach the code;

penalties for insufficient disclosure;

amending the code to include a duty to act in good faith;

amending the code to require parties to a franchise contract to consider goodwill or other exit payments;

a range of alternative dispute resolution processes, including bodies such as a franchising ombudsman or franchising tribunal;

recognising franchisees' interests on the leases between franchisors and landlords;

encouraging the ACCC to pursue test cases in the courts to refine and strengthen existing, but largely underused, legislative protections for franchisees; and

enhanced education campaigns at state and commonwealth level.

I recommend that all interested members obtain a copy of the report from the parliamentary website to read the range of views and issues raised in the report, as they are too extensive and, in some cases, complex to be adequately addressed in this speech.

As I said previously, the committee received extensive written and oral submissions, and it thanks all those who contributed—from professors and peak bodies to the mass of individual franchisees who wrote in with their often distressing stories of financial and personal suffering—and helped to produce what the committee hopes will be a real contribution to the necessary reforms needed in this important sector of the South Australian and national economy.

Franchising is an important method whereby South Australians and, indeed, Australians go about their daily life and business. Franchisors are large employers of Australian employees, and they are also large wealth generators. I applaud and encourage entrepreneurship; I am a big believer in it. Many members of my family are entrepreneurs, as, indeed, were my mother and father. They had their own businesses and, with little or no formal education, they were able to make their way in the world through business. It often surprises them that I am in the Labor Party!

However, I also see the real-life impact of mum and dad investors who are entering a new type of business. Thirty years ago, people bought a corner deli, a snack bar, a chicken shop, or a taxi, and they were left to their own devices. These people knew that through hard work they could make their businesses work either through government regulation, market demand, or whatever it might be. What has now been laid on top of this, in my view, is the ability to go out and buy a job through a redundancy payment, savings and house mortgages. Laid on top of that is a contract with a master franchisor who has the idea and the system. What the franchisees do not understand is that the market economy, in terms of what they sell and what they purchase, is regulated by a contract rather than the free market.

A very basic example of this is that if you sell a certain amount of produce and you are running short, you go out and buy some more. No business person worth their salt would go out and buy products that are not selling. This is just one example of what can happen to franchisees who are required to go out and buy products at a set price, despite the fact that they can get it cheaper somewhere else, through the master franchisor. They are also required to make certain minimum payments. This takes the entrepreneurship out of franchising. The entrepreneurship is often left to the master franchisor rather than the franchisee. I think that, if we want to encourage a bit of flair, ingenuity and more entrepreneurship, we need to allow franchisees to know exactly what they are getting through these agreements.

In conclusion, I would like to thank my fellow committee members for their contributions to the inquiry, with particular mention to the member for Light for his efforts in bringing this issue to the committee's notice and enthusiastically supporting its prosecution. I think it is fair to say that many of us in the committee were largely unaware of the impact of franchising on small mum and dad investors, and it is a credit to the member for Light and his constituents that he has come forward with this issue. I would also like to thank the staff of the committee, the Executive Officer, Paul Lobban, and most particularly our researcher, Ms Anna Nobis, who was taken on by the committee specifically to produce this report and who provided a piece of work that is a credit to her. Given the above, and pursuant to section 6 of the Parliamentary Committees Act 1991, the Economic and Finance Committee recommends to this parliament that it notes this report.

Mr PICCOLO (Light) (11:12): I wish to speak in support of this motion to note the report. On Thursday 29 March 2007 I made a speech in this house, and stated:

I am a great admirer of small business, especially those mum and dad businesses that not only provide valuable services to the community but also provide the mums and dads and their families with a sense of independence and fulfilment. Small businesses require a lot of sacrifice, hard work and commitment. Small businesses are also consumers and, like ordinary consumers, are sometimes subject to appalling and predatory behaviour by other businesses. Like other consumers, they suffer injustice at the hands of corporate villains whose behaviour is both unethical and reprehensible.

Today I would like to acknowledge two former business owners and a current business owner in my electorate—Ashley Orr, Julie Robertson and Brad Skuse—for their courage in speaking out against the oppressive behaviour of their franchisors. It was their testimony that gave impetus to this inquiry. Two weeks after this inquiry was established, the WA government established a similar one, headed by a very successful former franchisee, Mr Chris Botham. That inquiry arose from a great injustice imposed on local WA franchise by international franchisor Yum Foods International.

That inquiry reached conclusions similar to ours, and reported a week before the report of this inquiry was tabled in this place. The WA Minister for Small Business, in her comments to the parliament, stated that her inquiry recommended changes which included requiring franchisors to explicitly disclose franchisees' entitlements or lack of entitlements to goodwill and other compensation if agreements are not renewed, and requiring franchisors to conduct pre-expiry reviews with franchisees at least 12 months before the expiry of an agreement. The report also recommended that the federal government amend the Franchising Code of Conduct to make it compulsory for parties in dispute to attend mediation procedures and to ensure that mediation agreements are enforceable, with prescribed penalties set out for non-compliance. That inquiry heard a great deal of the evidence, as did our inquiry. In fact, our inquiry reached similar conclusions but we went a bit further. It is an interesting topic of discussion around the world, and the provincial government of Manitoba in Canada is currently exploring similar territory to our own inquiry.

The recommendations of the inquiry are very important, for both economic and justice reasons. In terms of economics, franchising is worth about $128 billion to the Australian economy on 2005 figures. There are 960 franchise systems, 93 per cent Australian-based, and over 62,000 franchises in Australia. They represent 14 per cent of our national GDP, and 420,000 people are employed in franchises. It is the fastest growing small business format.

It is for this reason that it is important to ensure that we have the legislative framework to make sure that it operates correctly. In regards to justice, the stories we heard clearly indicate that regulation has not kept up with some of the shonky practices of those rogues and predators who have entered the industry—not to build the industry but to exploit those within it. To put it in perspective, mum and dad franchisees have less protection from the harsh and oppressive behaviour of their franchisors than many workers do under the industrial laws.

The laws are federal laws, with some state laws in the area of retail tenancies. The challenge for the inquiry is that we need to have national laws. As mentioned, we held 10 hearings, received 46 written submissions and heard from a range of people, including academics, franchisees, the Franchise Council of Australia and the Franchisees Association of Australia Incorporated. Of all the witnesses we heard, the Franchise Council of Australia was the most hostile.

One area in which I strongly disagreed with the Franchise Council of Australia—and which was supported by most other witnesses, if not all—was its assertion that it was the only true representative of the franchise industry for both franchisors and franchisees. Given the evidence received by the committee to the contrary, this assertion borders on misleading and deceptive behaviour by the FCA.

The inquiry looked at three key areas of the franchise relationship, namely, precontract, the contract period and when the relationship breaks down. We looked at areas dealing with disclosure, registration, transparency, competition and efficiency. Our view was that investing in a small business should be no different from investing in the sharemarket, yet people who invest in small business have a lot less protection than those who invest in the sharemarket. For example, the disclosure document put out by a franchisor should be treated similarly to those put out by companies, or a company prospectus, so that the franchisee knows what they are buying and what risks are attached to that.

In terms of the precontract requirements, our inquiry found that better disclosure and registration of disclosure requirements would improve transparency in the industry and would actually help competition in the industry so that people would know what was on the market and could compare one product to another when purchasing. Also, it would lead to greater efficiency in the industry and actually weed out those who are not competitive. At the moment, there is no way for people to compare various products available on the franchise market. This disclosure would also help with research. People could collect data, which would be a basis for future public policy in this area.

In the precontract area, the committee also heard evidence about the need for training. While a lot of training occurs for franchisors—and the FCA actually does quite a good job in this area—training for franchisees is not adequate, and we recommend that money be put aside for training. The only course available for franchisees is one offered in the United States of America, which looks at the whole gambit of the franchise industry.

In terms of the contract period, the committee looked at issues dealing with good faith and fair dealing, unconscionable behaviour, penalties for breaches, and leases. It was quite clear from the evidence that we received that provisions are needed in the franchise code for franchisors and franchisees to be required to deal in good faith and deal with each other fairly.

That proposal to make it a statutory requirement was opposed by the FCA but supported by all other witnesses, from my recollection. It is interesting that the FCA opposed it even though it agreed that there is now an implicit requirement in the law to deal in good faith, but they wanted the right to write that away.

The third part we dealt with was when the relationship breaks down or the licence expires. Again, we were of the opinion—and our recommendations reflect this—that there should be good faith dealing, exit payments, or goodwill; and, to remove the ambiguity at the end of the licence period, we believe it should be a mandatory requirement that the disclosure documents should mention that up-front.

My understanding is that the Small Business Ministerial Council is looking at the possibility of changing the franchise code of Australia to include a good faith provision. This is very important because members may be aware that recently the Kleins jewellery franchise went through the hoop and brought down a number of franchisees. Frank Zumbo, an associate professor of the University of New South Wales, who has studied Australia's franchising sector and who also gave evidence to the committee, said that he had been in touch with several Kleins franchisees in recent times and he has heard allegations of 'breaches of the franchise code, bullying, and mismanagement by the franchisor'. This is the sort of evidence the committee heard.

Now that Kleins has collapsed, franchisees want answers as to what went wrong. The major issue about Kleins is that, even though a lot of Kleins franchisees were aware that the franchisor was going down, because of the nature of their agreements they could do nothing about it.

I take this opportunity to thank the presiding member for his support on the committee. I also thank the other committee members who supported the inquiry. We came to a unanimous position on the recommendations. In particular, I would also like to thank Dr Paul Lobban, the executive officer, and the researcher, Anna Nobis, who did a great job in helping us research and write the report.

I strongly commend the recommendations to the house. Hopefully, the federal government will take up our recommendations. If there is no federal action, I think that in 12 months' time we should revisit this matter in this state and look at whether we (as a state) should take on the recommendations ourselves. While I am hopeful that the federal government will act, if it does not then I do not think this is an area of activity that we can leave unlegislated.

Time expired.

Mr GRIFFITHS (Goyder) (11:23): It is my pleasure to also make a contribution to this, the 65th report of the Economic and Finance Committee. I think it is fair to say that it was enlightening for all of us who were involved with the committee to actually hear the evidence and read the submissions from people who had made the effort to put in written comments about their relationship with franchises and how it affected them—some in a positive way, but many, unfortunately, in a negative way.

Indeed, it is important to recognise the role that franchises play when our presiding member, in introducing this report, reflected upon the fact that franchise turnover represents 4 per cent of the nation's GDP. An enormous amount of dollars is involved, so it is important that parliaments across the nation ensure that legislation is in place that will allow franchises to operate, but operate in an appropriate manner that will support those who are risking their future financial opportunities in life and who want to create a future for themselves. It is important that the legislation is there.

I offer my sincere congratulations to the member for Light. While the presiding member has reflected upon this, the member for Light probably does not want to admit to the fact that he was the one who drove us towards the carrying out of this investigation. That said, it did not take too many comments from him to convince the committee of the merit of it.

It was obvious to us that the member for Light had received some concerns from constituents within the Light electorate who were very worried about what had been happening to them. So, the member brought the attention of the committee to this and we, I think, in just about record time, resolved to undertake an investigation, and it has proved to be worthwhile for all of us.

It is refreshing to see that there are a lot of people out there who actually want to make a contribution to the parliament and submit evidence. Many people came forward, some with what you could say is a vested interest, because they are part of the master body that represents franchisees and franchisors.

However, the majority of the submissions that I made a real effort to read through and review were from families, the independent operators, who were really committing to their financial future by borrowing money, using (as the presiding member said) a redundancy payment from an industry in which they no longer worked, but committing themselves to what they hoped would be a bright future which, sadly, in too many cases was taken from them.

It really did reinforce the fact that in some cases there were enormous financial losses, but it also created enormous pressure on families. As part of the evidence, we had the opportunity to read and hear about pressures brought about by tremendously long working hours in an effort to try to make franchises work. Unfortunately, that was creating divisions in relationships and within families, and I think that is very sad. People were commonly working between 70 and 100 hours per week trying to make their franchise work. However, it was beyond them, no matter what they did; it was leading to divorce and bankruptcy within families—and that is a great shame.

As matter of principle, I strongly support the fact that businesses should be allowed to operate and grow, availing themselves of every possible opportunity: that is the basis of the capitalist economy under which we in Australia operate as a nation. In my youth, having left school, I obtained a job and worked within local government for a number of years, but I was envious of the people I grew up with who had taken a risk in life and left jobs to run their own business, operating a newsagency, nursery and those kinds of things. It was not part of a franchise, but those people showed that they wanted to be in charge of their lives.

Franchises are exactly the same. You make an enormous financial commitment and often sign a contract to say that you will purchase a certain amount of product per week which you have to sell. Even if you cannot find a market for that product, you still have to purchase it.

There are a lot of issues involving franchises that need to be improved, and disclosure is one matter that did concern me. It is impossible to have legislation in place to prevent people from making silly decisions. We emphasised to the people to whom we spoke the need for them to ensure that they investigated their franchise options thoroughly and that they undertook as much training as they could so that they did not go in blindly.

However, it is interesting (and I hope I am correct in saying this) that in some of the submissions we received, even when that advice was available, it was not at the required level: training was taking place on the job working at another franchisee's operations and people were never provided with the full financial disclosure of previous franchisees, perhaps even at the same premises. They had to try to make the best possible decision but were pressured into making that decision sometimes within a restricted time frame and without an opportunity to get good advice.

Many people who were apprehensive spent a lot of money getting good legal or financial advice. Those who might have talked to a trusted acquaintance who gave an objective assessment on the matter would still say, 'Yes, I am still going to do this.' Sadly, it has come back to affect these people seriously, which is a great shame.

Another thing which concerns me is the churning that is occurring within franchise industries. It seemed that some unscrupulous master franchisors did not necessarily care about the people who purchased and worked in their franchises. They just wanted somebody to operate the franchise licence and the franchisor to receive a revenue from it. If the franchisee went broke then that was another licence that the master franchisor had available to sell to some other unsuspecting people who would be risking their financial future.

There needs to be legislation that allows full disclosure to occur so that people who go into it have the chance to obtain as much information as they can about the previous history of the franchise, including information on what the turnover has been in the area and what the financial projections are, and to have it independently audited in order to have a say about it.

I was also concerned about the leasing arrangements that exist in some shopping centres. I am certainly not casting aspersions or making criticisms about every operator but undoubtedly, from what we heard, some master franchisors who have a lease with a shopping centre operator will make premises available to the franchisee at a certain cost above what the master franchisor is paying. So, the master franchisor is gaining a revenue not only from the franchise licence and the products that the franchisee is selling, but also from the premises. Really, the master franchisor has no negatives here and is in a position to make a lot of money. Indeed, it is obvious to us that some have made a lot of money without necessarily giving support to the franchisee.

It is important to note that, in some cases, the relationship breakdown between franchisee and franchisor had made things impossible for them. I do not want to cast aspersions as to where the responsibility for that lies, but there was a very clear message in the submissions made to us about it. I certainly hope that members of this house and, indeed, of parliament take this opportunity to read the report. All the submissions, to some degree, called for a review of the legislation, and it was pleasing to note that a federal committee had investigated this, although as I understand it, the terms of reference for the committee were somewhat restricted to what they might have been. However, we were aware that the Western Australian parliament was also conducting an investigation into franchises at the same time, and a lot of the submissions we received were also made to the Western Australian parliament.

I sincerely commend the report to all members. If you want to be out there dealing with the issues in your electorate (and franchises exist across the nation; you do not have to be based in only a metropolitan area to have people running franchises) and if you want to be in a position to provide the greatest possible support to the people who live in your communities, it is important that you have some awareness of franchises, because it is a growing industry.

We heard one amazing story of a very large franchise operation in Western Australia, with something like 60 stores—

Mr Piccolo interjecting:

Mr GRIFFITHS: I am corrected by the member for Light, and I thank him for that: it is 50 stores. The master franchise was held by an operation in America, and it suddenly decided that it did not like the Western Australian franchise operator. The operator was gradually going to be driven out of business. That group had millions of dollars tied up in the operations of a very successful fast food industry. I could not believe it. The operation had a 20-year history of success in Western Australia, had obviously developed new stores as it had gone along, had added to its stock of stores, and had provided employment opportunities for thousands of people across Western Australia, but a decision was made in American that, 'No, you are no longer going to have that opportunity.' Gradually, as each franchise lease came to the end of its life, the operator was told there was no opportunity to renew it. It is disgraceful that that can happen in this nation, or indeed the world.

I hope the parliament takes up the challenges the report recommends. A lot of work needs to be done in the future, but I sincerely believe that if we take action on it we will improve opportunities for Australians.

I also want to commend the parliamentary staff. The committee's presiding member, the member for West Torrens (Mr Koutsantonis) was committed to this inquiry. He attended all the meetings, he was very aware of the issues we were discussing and, when we had video-conferencing, he was fantastic on questioning. We also relied a lot upon the member for Light, who made sure he reviewed every submission, and I appreciate his effort in that regard. It is important to note that this report is supported by all members of the Economic and Finance Committee. It was a unanimous decision: there was no debate among opposition members of the committee regarding any form of minority report. We recognise its importance and we certainly hope that the parliament pursues the recommendations it contains.

Mr PISONI (Unley) (11:34): I speak in support of the motion and of the report. There are some things the state government can do, and it can do them quite quickly under the Retail Tenancies Act, to help not just the franchisees but also all small businesses which become victims of what I would say are aggressive leasing arrangements in major shopping centres, in particular. A section in the report states:

Franchisors in turn complained to the committee that especially with regard to large commercial shopping centre landlords they suffer a disparity of bargaining power.

I think that is a very important and fundamental problem that we need to address if we are serious about supporting small business and encouraging enterprise in South Australia. It is something at which the Minister for Consumer Affairs might like to look.

One problem mentioned in the report that was causing some difficulty—and, in fact, substantial financial loss to franchisees—was when the franchisor held the head lease, for example; yet it was the franchisee that held the personal guarantee to make sure that lease was paid.

There may be situations where the franchisor may very well not be paying that rent, for whatever reason, and then the franchisee may find themselves actually locked out of that shop by the landlord, even though they have been paying their rent to the franchisor as a lessee (or sub-lessee, if you like) of that lease.

I think that is an area that we certainly need to address, as well as the fact that in the major shopping centres all the turnover information of those small businesses must be surrendered to the shopping centre management. That is an argument that will go on for infinity about who is responsible for the goodwill or for the success of the shopping centre. Is it the managers of the shopping centre or is it the businesses who, collectively, are making the shopping centre a destination—somewhere to go?

That is a debate that I do not think we will ever be able to answer but, certainly, the landlords have the upper hand in the area of lease renewals in this instance, where they get around the protections that are there at the moment by not renewing your lease, or by dividing a shop into two that may have been a single shop and making the existing tenant then rent two shops, which includes additional fees for marketing and other costs. Of course, they are then paying marketing costs as franchisees not only for the shopping centre on top of their lease but also to the franchisor; so it is a double-dip. Often it is a mark-up on the rent that the franchisor is paying that the franchisee then pays.

That is fine if it is in the world of free enterprise. We are not here telling people how they should be running their businesses or how they should be able to make a profit, but shopping centres use the turnover information to determine what your rent renewal should be when your lease comes up for renewal every two or three years. They are not very long leases in the major shopping centres, because they are very attracted to using that information to keep pushing your rent up. So if you run a very successful business, they will then look at your turnover figures and say, 'Look; you're making more money now than you did when you first moved in, so we want a good share of that, because our argument is that, as a shopping centre, we're responsible for the goodwill that you're producing in building that business. We're responsible for the profit that you're making in building that business because they're coming to this shopping centre.'

They have completely discounted the fact that you may have run a very tight ship, that you have found a product that sells well, that is priced well and that is in demand, and that you are at the beginning of an upward wave of a particular product. For example, you may have started up a mobile phone shop when mobile phones were considered a luxury and there were not very many of them around and, of course, as more and more people were buying mobile phones, your business was growing and your brand was growing. You took a risk going in there in the first instance, by making a significant investment in mobile phones, for example, so you should be there for the long haul, you should be there for the benefits. But under the current leasing system that our major shopping centres are allowed to have, they argue that they are entitled to the growth in your business.

They are claiming that they are responsible for that solely and wholly and so, consequently, your rent will go up from its original base rate to reflect the increase in your turnover. It is based on turnover: it is not based on profit, so you may very well be in the business of a high turnover-low profit product; however, the shopping centre will be saying, 'Your turnover has grown enormously since you've been in that position; we want some of that action and so, consequently, we're going to put your rent up.' They will not tell you what other people are paying, so it is very hard to determine what is fair and reasonable. You will know only that, after all the work that you put in over the past three years in increasing your profits, you are going to have to give a big portion of that to the landlord.

If you do not agree and do not renew your lease then your goodwill is virtually gone, unless you have a brand that people will recognise outside the shopping centre so that you can open up in a strip shopping precinct. I do not believe that issue was addressed in the report, but I would like to see some action in relation to it.

It appears that the report strictly covers franchises, but there are also interesting arrangements that some people might describe as franchising. A very large furniture and electrical chain in Australia has a very interesting way of operating its franchises. If a new store is to be opened, a salesperson or someone from outside the business might be approached and asked, 'Would you like to run our new business for us?' When they ask about the terms and conditions, they are told to start up and incorporate their own company. They are guaranteed a minimum salary (which might be $40,000 or $50,000 a year) and payments for a mobile phone until they get the shop up and running and they are told the profits will be split 50/50 on anything above that.

It sounds like a good deal. There is a safety net and the potential to earn hundreds of thousands of dollars a year. Of course, what happens in reality is that they build up the business in what may be a high-growth housing area, so there is a lot of demand for the products. They build up a substantial turnover and earn maybe $250,000 a year as a shop manager/investor in the shop. They are taking a risk by buying products outside the product range and negotiating deals with their clientele. But, overnight, head office might say, 'Thank you, pick up your company and take it off to Wagga.' All of a sudden a person's income could drop overnight to the minimum $40,000 and there is no goodwill for the shop manager/investor in that situation.

I know people go into that situation willingly and take the risk. They learn valuable lessons about running a business, but it is another example of how some of the larger chains can take advantage of others to benefit themselves.

Motion carried.

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