The South Australian Government has passed new legislation under the title SA Small Business Commissioner Bill.

Part of this change introduces new obligations for franchisors in the franchising industry operating in that State and has generated some some remarkable whinging by some in the industry. I read an article from a well known franchise commentator in a blog today that made me think he must have lost an arm or similar due to the new legislation.

My background in franchising over the years is based on being involved in the industry as an advisor, franchisor, franchisee, strategic planner and as an accredited  mediator for the franchsing Code of Conduct. I support any action that helps eliminate the opportunity for a franchisor to take advantage of a genuine hard working franchisee. I know that there are also good and poor franchisees in some systems but my experience suggests that where there are troubles in a franchise system you can generally trace it back to a number of fundamental business system faults at the franchisor end. Backed by poor recuitment systems and poor ongoing communications.

It should also be recognised that there are some great systems operating in Australia and I bet they are not concerned about regulation as they just get on with it without crying "poor me " over red tape and government rules.

You only have to listen to the comments made by some at franchise shows when talking to prospective franchisees to undertand and wonder if the truth is sometimes streached as to future success. At a recent show I posed as a potential franchisee for a book I am writing and was shocked at some of the comments about particluar systems by their represenatives.

In franchising,  the franchisor has all the control and many prospective franchisees do not realise that they are really only renting a name and a system for a set period of time. This is fine but it's when franchisors abuse that control that disputes are likley.

The Franchise Code of Conduct does not , in my opinion, go far enough in ensuring  that all information provided is truthful and acurate to enable a potential franchisee to make an informed decision. Sometimes you have to protect people in our society from themselves and often a decision to buy a franchise or small business is made through the heart and not through common sense and proper due diligence.

On a final note, the franchise consultant who asked me during a meeting one time that does it really matter if the numbers are not entirely true as franchisor needed to find more franchisee to ensure he had enough capital coming in through up front fees to keep the business viable. That's one reason we need tighter regulation.