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The current royal commission into Australia’s banking sector recently heard testimony about business loans to franchisees, according to media reports.

The Commission highlighted specific cases where franchisees were granted loans subsequently deemed “unsuitable”, and where guarantors were forced to pay off loans that the financial ombudsman has since found should not have been granted. Under scrutiny is the banks’ process of assessing the suitability of a loan and the profitability of a business.

Senior counsel assisting the Commission stressed the importance of franchising in the small business sector, citing a doubling of franchise businesses operating in Australia in the past 20 years and the fact that almost 500,000 Australians are employed in the franchising sector.  Separate from the banking royal commission, franchising is also subject to a joint Senate inquiry with more than 80 submissions already uploaded to the inquiry website. Read more 1 ; Read more 2

Source: Franchise News 2 June

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