Latest ACCC report compares Franchising with small business. Franchising Wins

Written on the 20 February 2012 by Australian Franchises

The Australian Competition and Consumer Commission has released their latest report:

Comparison of Franchising and Small Business complaints and enquiries

Report #3 1 July 2011- 31 December 2011

The ACCC releases these reports every 6 months as recommended by the 2008 Parliamentary joint Committee on Corporations and Financial Services Franchising inquiry report. The Committee recommended "...the public release of broad ACCC data on trends of inquiries and complaints from small businesses and franchising businesses..."

Basically the ACCC handles thousands of complaints and enquiries every year from small business owners, franchisees and consumers. By recording the reason of the enquiry or complaint and making these details public, everyone is able to see a snapshot of how well small businesses and franchises are operating, how well they understand their legal obligations and over time, how changes through regulation are improving the way small busineses and franchises operate for consumers and business owners.

The latest report covers the second half of 2011 from 1st July - 31st December.  During this period the ACCC fielded a total of 365 complaints (up 30% from report # 2) regarding franchise systems and 2,109 complaints (up 46% from report # 2) for small businesses. In total the ACCC recorded 645 complaints for franchising and 3,548 complaints for small businesses from 1st January - 31st December 2011.

The majority of complaints for both franchising and small business came from NSW with 29.9% for franchising and 28.0% for Small Business. Qld was second for franchising at 25.2% whereas Victoria was second for small business at 23.1%

It is really no surprise that 44% of all franchise related complaints during 2011 were for contractual issues compared to small business receiving on 9.3% as contracts are the foundation of all franchise systems. If either party (franchisee or franchisor) is upset enough to contact the ACCC then it's very likely that they feel their contract has been breached by the other party. However only 28.8% of all franchising complaints during 2011 were regarding Misleading Conduct / False Representations. This pales in comparison to small business which recorded a whopping 60% of all complaints in this category.

Of course comparing small business to franchising is really like comparing chalk with a whiteboard marker - they can both work, but starting your own small business is often a lot messier. The most interesting statistics in the report are the blank spaces. That is the lack of complaints from the end consumer regarding how they have been treated by the franchise systems.

Good franchises have spent years developing their operational manuals to cover everything regarding customer service. How you greet the customer, how you treat the customer, how you reward the customer & how you handle minor complaints so they don't escalate. These manuals show franchisees how to run every aspect of their business with minimal stress so that they can concentrate on serving their customers better. Buying a franchise isn't for everyone and operating under a franchisors strict operational guidelines are bound to upset a few franchisees who want more freedom in how they run their businesses. But when you look at how consumers feel about small businesses and franchises, it's clear to see why buying into a franchise is such a popular choice.

Click here too Download your copy of the latest ACCC Comparison of Franchising and Small Business complaints and enquiries report (and previous reports)

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