7-Eleven affair could hit Coalition at next election

Robert Gottliebsen, 11 September 2015

The chief executive of 7-Eleven in Australia, Warren Wilmot, this month stood down as chairman of one of Australia’s most successful lobby groups, the Franchise Council of Australia, after only eight months in the job.

Given the publicity about the 7-Eleven franchise agreements, standing down on the eve of the Four Corners program made sense. There was a lot of work required at 7-Eleven.

But in those short eight months Wilmot was one of the most brilliant chairmen the Franchise Council has ever had. He faced the daunting problem that Prime Minister Tony Abbott had made a landmark pact with the small business community that the consumer protection against unfair standard contracts would be extended to small enterprises. It was an unqualified promise and won him a lot of votes because it delivered the support of the small business community.

For many franchisors who were members of the Franchise Council, this was a horror promise from the Coalition because there is little doubt that many of them might find that their standard unnegotiated contracts would be declared unfair.

If the Four Corners/Fairfax media research by Adele Ferguson is correct — and I am not in any way doubting it — then the standard contracts put out by Wilmot’s 7-Eleven might be one of those declared unfair because they made it impossible for many franchisees to make a profit without using low-cost labour.

Indeed that’s exactly what former ACCC chief Allan Fels concluded on the program. Fels is now heading the 7-Eleven inquiry into its contracts. The Allan Fels I have known for a long time will honour his word and recommend changes to make 7-Eleven contracts fair — exactly what would have been required under the Abbott “fair contracts” promise …

The main aim of Wilmot, as head of the franchisors lobbying body was to have any unfair contracts legislation dropped by the Coalition or thrown out of the parliament. But just as powerful an achievement would be to have the legislation made absolutely useless by strategic clauses.

There is no doubt that Wilmot and his franchise council played a big role in having the Coalition limit the impact of the unfair contract legislation to contracts under $100,000. That meant that just about every franchise contract escaped the legislation because the bill was prepared so anyone can avoid the jurisdiction of the legislation by making the contract long enough to reach the $100,000 limit but allowing the franchisor to end the contract at short notice. It made the legislation totally useless.

Obviously Wilmot’s franchise council was not the only lobbyist working to make the legislation nonsense, but it was clearly a big player.

Indeed, at the Senate inquiry into the legislation the former Franchise Council chairman and a legal adviser to franchisors, Norton Rose’s Stephen Glass, made a submission. I should add that our system is set up so people can lobby their case and they are encouraged to do so.

These days, Liberal politicians in Canberra are scratching their heads wondering how they moved from being the heroes of small business to the enemy and how they came to break a solemn promise at the behest of 7-Eleven and associated groups. The man who was the small business hero, Bruce Billson, is now discredited and the small business community has launched a vigorous social media campaign against him in his electorate. He will now receive the full wrath of 7-Eleven. The early results of the campaign have been staggering and he is unlikely to hold his seat at the next election.

All the Coalition members who have seriously studied the legislation know they have broken a promise and deserve to be punished by voters. But they are only now realising that in the 2016 election campaign they will get caught up the in the 7-Eleven affair.

The Coalition is comforted by the fact that the ALP has never taken much interest in small business. But there are huge numbers of voters involved and if Opposition Leader Bill Shorten did get interested it would make the Coalition even more vulnerable and could lead to a catastrophic defeat.

Kevin Rudd originally devised the fair contract extension to standard negotiated contracts to small business. I don’t know who led the lobbying that caused Rudd to drop the idea but almost certainly the big franchisors played a role. So if Shorten does decide to back small entrepreneurs then no doubt franchisors will be knocking in his door just as they did to Kevin Rudd and Tony Abbott. Meanwhile all sections of the media will now be watching for any money that can be linked to franchisors that is paid into campaign funds of either or both major parties.

The unfair contracts legislation and its nonsensical clauses come before the Senate next week.

Extracted in full from The Australian.