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Membership of the Franchise Association has surged after the Green Acres franchising scandal.
Twelve new franchising systems have become members of the industry body in the first five weeks of this year, compared with four over the same period last year.
The Green Acres issue, where former area
manager Keith Lapham is accused of selling about 200 non-existent ironing franchises to investors who paid between $21,000 and $25,000 each, has had a hand in the deluge of sign-ups.
Police have also launched an investigation into another company, commercial cleaners Green Power, for allegedly selling bogus franchise businesses.
"It probably indicates that people are looking to put some distance between them, or at least isolate those systems that maybe aren't working as well as they should, and indicate that they are best practice," said association chief executive Peter Fergusson.
The association has made preliminary submissions to the review of the Financial Services Provider (Registration and Dispute Resolution) Bill, urging for more protection for franchise business owners.
It wants compulsory registration for companies offering franchises for sale, registration of advisers to the franchise industry, possible disqualification from registration, and compulsory mediation before parties enter legal routes.
The association has also had a series of meetings with Commerce Minister Lianne Dalziel on moves to better protect the $20 billion industry.
Fergusson said it was not in favour of specific franchise legislation, as is the case in Australia.
"Everything that happens in business happens in franchising, so there is quite robust business law that exists right now which affects everyone, whether you happen to be in a franchise business or not."
But a compulsory code of practice, which governed all association members, was one place to start.
"At this stage, 50 per cent of franchises are members of the association. That's not to say that the other 50 per cent are not best practice but there will be people among them that I know of that don't meet certain standards."
Fergusson said that would still not have stopped what happened at Green Acres, which was and still is an association member. The company had followed the protocols, he said, "but you've got a gentleman who's working outside the system allegedly in a criminal way".
"You can legislate for business and process, but you can't legislate for human behaviour.
"If someone is out there with a criminal intent, and they want to do something, no law in the world will stop them."
Another option was to introduce a certification system to ensure the legitimacy of a sale.
"That means in the instance of Green Acres if I was buying one of those businesses, I would have had a certificate that indicated that Green Acres was aware that this business was for sale ... That links the top end to the bottom end, and takes away the element of, 'we didn't know'."
Fergusson said members were concerned.
"There are some really, really good businesses and some great franchise systems - the fact that it casts a shadow over the industry or the sector does upset and concern a number of our members, and it upsets and concerns us as well."
Commerce Minister Lianne Dalziel has asked her officials to look at whether the scope of the bill before the House governing financial service advisers would be broad enough to address the problems that have arisen within the franchising industry.
Hundreds of franchise operations had brought a very small number of complaints.
It had been a successful model for helping people into their first business, she said.
"I don't want to put compliance requirements across the sector without seeing a corresponding benefit of protection. That's what I want to be very careful of - I don't want to use a sledgehammer to crack a nut."
