Could the Hells Angels be considered a franchise under proposed laws in South Australia, wonders Simon Young.

Off the Wire News - Biker Rights Issues and commentary... Some more news from down under... read between the lines here... a government agency with investigative powers greater than the courts... and outside the courts... sound like some agencies we have here?... think they are learning from or partnering with the U.S. government?... read on...

Now that the dust has settled somewhat on the proposed South Australian franchising law introduced into that state's Parliament last month, one question being asked is whether the proposal will improve dispute resolution.

The franchising industry has undergone three separate inquiries in the past three years; by the Western Australian government, the South Australian Government and also by the Senate Parliamentary Joint Committee on Corporations and Financial Services, whose report was presented to the Federal Government in December 2008.

All inquiries raised significant areas of concern about the industry and the Senate Committee made 11 recommendations to improve the franchise sector.

Enhancements to dispute resolution processes were recognised as being necessary by the inquiries but the Federal Government in its round of reforms in November last year did not specifically address this issue.

Part of the proposed South Australian franchise law involves the creation of a Franchise Commissioner who would be responsible for not only resolving many disputes, but also enforcing the law.

The most confronting element of the SA Franchising Law is the extraordinary powers to be granted to the Commissioner.

The Commissioner will have the ability to: require a person to answer questions or to produce documents (with a potential $20,000 fine); require a person to give such information under oath; require a person to provide such information regardless of whether the information would tend to incriminate the person or expose them to a penalty; and commence legal proceedings for breaches of the SA Franchise Law.

The only other organisations in Australia with powers even remotely similar are corruption commissions and intelligence services.

Is franchising in such a dire state that powers similar to those claimed necessary to prevent terrorism are necessary? (As an interesting aside, could the Hells Angels, for example, be regarded as a franchise caught under the SA Bill? One wonders…).

But that is not the full extent of the powers granted under the SA Bill - the Commissioner will provide a dispute resolution function as well; if a franchise dispute cannot be resolved by mediation, either party may refer the dispute to the Commissioner for determination.

A conference must then be called between the parties, facilitated by the Commissioner, following which (if a resolution is not reached) the Commissioner will provide the parties with a draft determination.

Within 14 days of receiving the draft determination the parties may make written representation why the draft determination should be varied or confirmed.

After considering any written representations the Commissioner must make a final determination of the dispute by varying or confirming the draft determination as the Commissioner thinks fit. The parties are then bound by the final determination – and the Commissioner or the other party can apply to the District Court for orders enforcing the terms of the determination.

There is no right to legal representation in the dispute resolution process, although representation may be available in certain circumstances.

There does not appear to be any right of appeal against the final determination of the Commissioner.

Although the Senate Committee clearly recognised the need for improvements to dispute resolution processes - and there is ample support for a low cost, practical approach when dealing with franchise disputes - potentially leaving the parties without legal representation in arguments of law (arguments that are currently not making their way before the civil Courts and are very technical by nature) appears to far exceed what is needed, or was contemplated by the Senate.

A further unexplained dynamic is how the ACCC – the regulator of the sector – would interact with the Commissioner’s determinative powers. The outcomes of disputes that are determined by the Commissioner before the ACCC took action under its own investigative and prosecutory powers are unclear.

Without appropriate checks and balances to the Commissioner’s powers there must be concerns about the independence of the Commissioner’s position; the role traditionally fulfilled by Courts or Tribunals has not been diminished, but rather reinforced, if a Franchising Commissioner is created.

Simon Young is the legal practice director of Cooloola Law Pty Ltd and practices extensively in franchising matters, acting for both franchisors and franchisees. He has been a mediator with the Office of the Mediation Adviser, member of the Queensland Law Society Franchising Committee and holds a Masters degree in Law.

Original article...

http://www.smh.com.au/small-business/franchising/a-good-idea-but-does-it-go-too-far-20100118-mfzu.html