Nats leave vulnerable open to scams and rip-offs
new-zealand-labour-party
Wed Jun 24 2009 12:00:00 GMT+1200 (New Zealand Standard Time)
Nats leave vulnerable open to scams and rip-offs
Wednesday, 24 June 2009, 5:15 pm
Press Release: New Zealand Labour Party
24 June 2009
Media Statement
National leaves vulnerable open to scams and rip-offs
The National Party’s refusal to impose any form of regulation on the sale of franchise operations means desperate people have been left vulnerable to being ripped off and scammed, Labour’s Commerce Spokesperson Lianne Dalziel says.
“People who have lost their jobs and new migrants are often attracted to small owner operator service franchise arrangements,” Lianne Dalziel
A Review of Franchising Regulation last year showed that there was potential for a major disaster. Although the ‘Green Acres’ case was attributable to the alleged fraud of a single Master Franchisee, the impact on those who had entered into what they thought were genuine franchise deals was significant.
“I wonder if those people who lost thousands of dollars in the ‘Green Acres’ case last year or those people who will be taken advantage of in the future think the current laws are adequate.
“Following this review Simon Power had the opportunity to act but the Minister chose not make any changes to current regulations claiming ‘current franchising regulations are adequate’.
“The Minister appears to have been captured by those with a vested interest in the status quo,” Lianne Dalziel said.
“I note that his failure to act prompted Auckland University Business School law lecturer Gehan Gunasekara to speak out on the franchise sector and describe it as a ‘wild west’ and that franchisees represent around 30 percent of all claims brought under the Fair Trading Act, for misleading conduct in relation to the sale of businesses.
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“In opposition Pansy Wong met with and advocated for victims of a franchise scam but now in Government she has remained silent.
“It appears that while National MPs were prepared to make media statements in opposition that more needed to be done to protect people from franchise scams, once in Government they simply put it in the too hard basket.
“I have read the submissions that were made on the Discussion Document that have been made public and I am convinced that at the very least, mandatory disclosure should apply to all franchises, not just those who are members of the Franchise Association of NZ. This could easily have been implemented by enhanced self regulation and overseen by the Commerce Commission. This would have provided assurance to vulnerable individuals who often don't get the advice they need before signing up to such arrangements and at the same time compliance costs would be kept to a minimum.
“Simon Power will tomorrow speak at a Symposium on Franchise Regulation, where he will have to defend his lack of action on putting in place regulations that other countries take for granted,” Lianne Dalziel said.
ENDS
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