Cary Di Lernia

Quasi-Franchising: A New Model for Strategic Business Cooperation

Franchising’s capacity for reinventing itself is a matter of record. Indeed its continual adaptation to accommodate changing circumstances and market conditions is a major factor in its increasing influence throughout the world. The franchising relationship is based on a prescribed business model developed by the franchisor and carried out under the franchisor’s guidance and oversight by franchisees who are granted the right to trade under the franchisor’s brand and system. The manner in which the franchise model is implemented is nevertheless capable of infinite variation. It is its capacity for adaptation and innovation which drives its relentless development.

Beyond Main Street: Franchising Strategies for Indigenous Entrepreneurship in Australia

Australia’s Indigenous population faces disparities which tarnish Australia’s image as “the lucky country”: a life expectancy markedly less than non-Indigenous Australians, lower education standards, poorer health, greater unemployment, and the list goes on. Having developed a culture which enabled first Australians to survive, and indeed thrive, for over 60,000 years in all areas of Australia’s massive landmass and challenging climate and conditions, Australia’s original inhabitants have faced their greatest challenge in the form of European invasion and settlement just over 200 years ago. Successive Australian governments have made regrettably little progress in dealing effectively with the challenges faced by Indigenous Australians living within, and alongside, modern Europeanized and increasing Asianized Australia. A massive welfare budget has not resulted in sustained positive outcomes, and there is increasing recognition from Indigenous leadership that there is a need to find a way out of welfare dependency and that economic empowerment is likely to be a more effective strategy. This paper considers the potential role of franchising—albeit not as practiced in Main Street Australia—in supporting Indigenous entrepreneurship.

Regulating the Franchise Relationship: Franchisor Opportunism, Commercial Morality and Good Faith

As franchising increases its influence internationally, regulators increasingly face the challenge of the appropriate manner of its regulation. A recent Australian report has focussed attention on an obligation of good faith as an appropriate regulatory strategy to address opportunistic conduct and has concluded that while the prior disclosure obligations of Australia’s regulatory instrument for franchising (the Franchising Code of Conduct) are for the most part adequately addressed, there remain concerns because of the ‘continuing absence of an explicit overarching standard of conduct for parties entering a franchise agreement’. The Opportunity not opportunism report of the Parliamentary Joint Committee on Corporations and Financial Services (December 2008) recommended that the optimal way to provide a deterrent against opportunistic conduct in the franchising sector was ‘to explicitly incorporate, in its simplest form, the existing and widely accepted implied duty of parties to a franchise agreement to act in good faith’. In November 2009 the Australian Government rejected this recommendation on the basis that it would ‘increase uncertainty in franchising’. This paper explores the challenges faced in grafting the civil law concept of good faith onto a common law system. It suggests that in Australia and other common law jurisdictions – and even in civil law jurisdictions – good faith is more an elusive ideal than a well settled commercial standard and that issues of definition, scope and application may frustrate its intended application in the franchising context.