Australia
26 October 2007
Question marks hang over the future of the KFC chain in WA after claims that the world’s biggest fast-food company, which owns the brand, is refusing to renew the franchise licences of the popular restaurants.
Peel Labor MP Paul Papalia told State Parliament yesterday that US-based Yum Foods International, which owns more than 34,000 restaurants in 100 countries, had offered to buy the 46 KFC restaurants in WA for significantly less than their market value.
It is understood the chain’s WA operator, Competitive Foods, has refused the offer.
As a result, Yum can simply resume the licences one by one as they lapse over the next 20 years.
The first licence to expire is that of KFC in Rockingham on November 19.
Yum did not respond last night to questions, including whether it was committed to maintaining the KFC brand in WA and what its plans were for the Rockingham store.
Competitive Foods will retain ownership of the Patterson Road premises, which was purposebuilt as a KFC restaurant, but will not be able to run it as one after the licence lapses.
It is understood Competitive Foods will employ the 40 employees at other outlets.
In State Parliament, Mr Papalia asked Premier Alan Carpenter to intervene.
“My concern is that a franchisor could use its right of nonrenewal of a franchise agreement to potentially deny the franchisee the economic benefits of building a strong and successful business, without any compensation for the goodwill built by that franchisee,” Mr Papalia told Parliament.
The Premier said the State Government did not have the power under present legislation to help resolve the matter.
He claimed that Federal intervention was needed.
He revealed that an inquiry would be launched into the operation of franchise businesses in WA and would report to Parliament by March 31 next year.
Outside Parliament, Shop Distributive and Allied Employees Association State secretary Joe Bullock said Yum was engaging in “appalling” conduct in a bid to pressure Competitive Foods into selling its restaurants at lower than market prices.
“It’s theft,” he said. “(Yum is) attempting to steal a proportion of the goodwill that’s been built up in this business over 38 years by Competitive Foods.
“It is appalling behaviour which in most places would be illegal.
“They have scoured the world to find a legislative loophole and they are intent on exploiting it.”
Mr Bullock said that in most jurisdictions franchisors could refuse to renew a licence only if they had a good reason.
“The State Government has fair trading legislation and it is the union’s view that this should be addressed by regulation, by a stroke of the ministerial pen,” he said.
Source :
www.thewest.com.au
