Earlier this month we had the privilege of hearing from 7-Eleven CEO, Angus McKay.

 

7-Eleven leading the way on Franchising Code reform

 

Angus McKay joined the business as its new CEO in March 2016 and has led a wide-ranging change program throughout the business, including the largest wage repayment program in Australia’s history, and a comprehensive voluntary compliance deed signed with the Fair Work Ombudsman described as “the most robust and comprehensive that any franchise brand has in place in Australia.”

Mr McKay reiterated 7-Eleven’s longstanding support for the Government’s original legislation, and outlined how the reforms 7-Eleven has already undertaken, and proactively agreed with the Fair Work Ombudsman, are well ahead of the changes under the original Bill.

“While we are still reviewing the amendments passed by the Senate on Monday, we are pleased that the original Bill included a number of reforms 7-Eleven first proposed in mid-2016 to raise the bar across the industry, including expansion of franchisor responsibilities and increased penalties for breaches of the Fair Work Act,” said Mr McKay.

“However, while the changes in the Bill hold franchisors to a higher standard of compliance, the relevant industry codes lack the commensurate power for franchisors to remove franchisees for serious non-compliance with workplace laws.”

7-Eleven is calling for the two relevant industry codes –the Franchising Code of Conduct and the Oil Code – to be amended so franchisors have the right to immediately terminate a franchise agreement in the case of serious non-compliance with Commonwealth Workplace Laws or Fair Work Instruments.

No such power currently exists in either industry code. Underpayment (no matter what the amount) does not entitle a franchisor to terminate an agreement. Termination for underpayment is only available to a franchisor if it can be demonstrated at the requisite level of proof that the underpayment has occurred in a way that involves fraudulent conduct. The termination bar is too high, takes too long to meet, and does not strike the right balance between protecting the legitimate rights of franchisees while upholding workers’ rights and the broader integrity of the sector.

“Our experience demonstrates that the barriers to terminating a franchise agreement in cases of underpayment are difficult enough for a company the size of 7-Eleven to pursue through the courts, let alone the two-thirds of Australian franchisors that are small-medium businesses,” said Mr McKay.

“While we support a level of expanded franchisor responsibility, we call on the Government to appropriately balance this with the right under the relevant industry codes for franchisors to reasonably terminate a franchise agreement in the case of serious non-compliance with workplace laws.”

You can see more of our interview with Mr McKay here.