Co-operation key to small business success

03 June 2021

The Business Council of Co-operatives and Mutuals (BCCM) welcomed the announcement of changes to the Franchising Code this week responding to its call to clarify the difference between a co-operative buying and marketing group and a traditional franchise. A new clause provides an exclusion from the Code for co-operatives registered under Co-operatives National Law or the Co-operatives Act 2009 (WA).

CEO of BCCM, Melina Morrison said, “The lack of clarity in this code and in other regulatory codes reflects a historic lack of awareness and understanding of the co-op model, which is designed to enable small and medium-sized businesses to work co-operatively for the benefit of their members, employees or customers. Co-operatives resolve the power imbalances of traditional franchising models by giving ownership and control of the group to the small business owners.

“The change to the Franchising Code is a positive step, based on recognition by the Department of Industry and the Minister of the difference between a co-op model and a franchise model, as stated in the Explanatory Memorandum for the amendments:

This provision explicitly excludes co-operatives registered under a State or Territory co-operatives law from being subject to the Code. This exclusion reflects the understanding that true co-operatives, which, unlike franchises, are owned and controlled by their members and which have voting rights based on membership rather than shareholding, do not exhibit the same inherent power imbalances and potential conflicts of interest which exist in many traditional franchising models.

“The co-operative model is increasing in popularity as a vehicle for small businesses to come together to create the market power they need to compete with other larger corporations. This has the further advantage of building a strong, sustainable, Australian-owned SME business sector with a footprint in markets where there has been increasing concentration of ownership impacting genuine consumer choice and competition,” said Morrison.

BCCM also welcomes the ACCC’s small business collective bargaining class exemption that is in force from today. “There are significant productivity benefits to removing barriers to small business co-operation. We have actively supported the implementation of this reform through submissions and our participation in ACCC Small Business and Franchising Consultative Committee meetings,” said Morrison.