Last week’s confirmation of Craig Emerson as Federal Small Business Minister should come as good news to the franchise sector. Emerson’s appointment should provide continuity by creating a smooth transition from shadow minister to minister, and consistency in Labor’s approach to the small business sector from opposition to government.

For franchising, Emerson should be good news. With the exception of a couple of years running his own consultancy, he has been a career public servant working for Australian state and national governments, as well as the United Nations. In itself, a career as a public servant may not at first be appealing to the small business sector, but look past that at his impressive academic qualifications. Emerson holds a doctorate in economics, which means he has more than a passing understanding of how markets work, how they grow, and what it takes to keep them alive and vibrant. More than most, Emerson will understand why franchising has variously been described as “one of the greatest inventions of western capitalism (1)” and “the single most successful marketing concept ever(2) ”.

In this regard he is no slouch. In the lead-up to the election, the Franchise Advisory Centre asked both Emerson and the then Small Business Minister Fran Bailey to provide a policy statement on franchising for the electronic bulletin Franchise News & Events. Not only did Emerson deliver in the requested timeframe, but he also provided a range of intelligent and well-considered policies that in the main should auger well for the sector.

Bailey, on the other hand, flick-passed the request for a franchise policy statement to the Coalition’s headquarters, which responded late and in a format different from that which had been requested. When the Coalition policy finally arrived, it said virtually nothing about the future of franchising in Australia. Then, in the dying days of the election, Bailey announced that more comprehensive changes to the Franchising Code of Conduct might be considered – a move completely at odds with her policy statement.

Emerson has a couple of franchising challenges to deal with in his first couple of months in office. The first is balancing the interests of the Western Australian and South Australian governments who have both announced state-based inquiries in franchising, against the national regulatory framework already in place for the sector. Condemnation of these inquiries by various groups automatically assumes the prospect of additional, state-based legislation, which would be regressive and counterproductive to the growth of franchising in Australia. Emerson’s challenge is to minimize the risk of additional state-based legislation for franchising, while at the same time drawing national lessons from these inquiries to benefit the sector as a whole. Government support for education initiatives, particularly pre-entry education for franchisees, would be invaluable in this regard.

The other challenge is how he deals with franchise interest groups which have decried franchising as a whole, based on the unfortunate circumstances of individual franchisees. As an economist, Emerson will know that it takes many lubricated wheels working together to make a strong and efficient economic machine. By contrast, politicians normally function on the basis that the squeaky wheel gets the oil. Hopefully in Emerson, the economist will outweigh the politician.

(1) Us House of Representatives Committee on Small Business
(2) Naisbitt, John. Megatrends, 1982

By Jason Gehrke, Director, Franchise Advisory Centre

This article first published December 4, 2007. It cannot be reproduced in whole or in part without the author's express written permission.

Copyright, 2007.