Chris Bothams released his final report this week entitled: “Inquiry into the Operation of Franchise Businesses in Western Australia”.
You judge for yourself: How close to your experience is it? (free download).
- a national franchisor registration would be nice (including the sunk cost-captured franchisees, of course), and
- make proposed government-submitted disclosure documents accessible on the internet (just like Caleasi in California is now).
- it is +30 years behind the times,
- potentially misleading, and
- mostly irrelevant.
As far as intellectual rigour goes, let’s compare Botham’s report to a Canadian report. In 1971 Samuel Grange who retired as an Ontario Appeal Court justice, said this about franchising:
Throughout the evidence it was a recurring complaint that the franchisee is constantly plagued with the threat of termination of the franchise…
…the franchisee has invariably invested time and money, and he knows that he will lose it all if the franchise comes to an end. Naturally, he is prepared to be servile, and if not, he is generally not long for the franchise family. p. 40 [my emphasis] [Grange Report full monty]
Unlike Mr. Bothams, Grange did his insightful work without the benefit of reading Gillian K. Hadfield’s work, especially Problematic Relations: Franchising and Law of Incomplete Contracts [BTW: 49 of the most important pages ever written about franchising].
Mr. Bothams ignores the unique vulnerability that franchise investors suffer from (vis-a-vis independent business):
Franchisees own the unit’s assets but their life savings are controlled by someone else (the franchisor).
This ownership/control separation is makes the relationship totally unique.
The franchisor can further use their 101 discretionary powers to further strip time and money from the investor during the course of their relationship.
To mention only once and in an extremely narrow reference, the central fact of franchisor opportunism, suggest the inherent bias of this report.
My Contributions: Please also note on page 68 (Appendix 3: List of Submissions), Number 2: Les Stewart Consulting. That’s me. For what it is worth, I sent the most current, internationally recognized academic research to Mr. Bothams’s office.
This report goes out under his signature to Minister Margaret Quirk. My guess it will quickly sink out of sight.