Legal Insights

Franchising and the new small business ombudsman

By Shaun Temby, Christopher Marsh

• 01 February 2016 • 3 min read
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We examine the newly created role of Small Business and Family Enterprise Ombudsman

Kate Carnell, the former chief executive of the Australian Chamber of Commerce and Industry, was announced on Monday 1 February 2016 as Australia’s first Small Business and Family Enterprise Ombudsman.

Speaking on the announcement, Ms. Carnell said that a major part of her role will be to act as a conduit between small and medium businesses and the government so that small businesses don’t get caught up in lengthy and expensive court cases.

'From my perspective, the role is to be a strong advocate for small business and family enterprise across the board, particularly with federal departments to ensure that laws and regulations are appropriate for small businesses and family enterprises,' Ms. Carnell said.

Background to the new role

The creation of a Small Business Ombudsman was originally announced by the then Tony Abbott led Coalition before the 2010 election, as a way of better representing small businesses. The new position was announced as part of a broader package aimed at winning the small business vote, including the introduction of 'unfair contract terms' protection to certain business contracts. Ms. Carnell will start work in March 2016 and will be in the role for five years.

Powers of the Ombudsman

As independent ombudsman, Ms. Carnell’s role will be to:

  • advocate for small businesses and family enterprises
  • act as a ‘concierge’ for dispute resolution, with the aim to assist small businesses to resolve disputes without resorting to costly litigation
  • contribute to the development of Commonwealth laws and regulations relating to small businesses.

The Ombudsman has a number of specific powers at her disposal for small business disputes, including:

  • The power to recommend how a small business dispute in which her assistance is sought is managed, including recommending the parties pursue mediation. The failure to comply with this 'recommendation' may result in the non-complying party being 'named and shamed' by the Ombudsman.
  • Where the Ombudsman believes that a person has information or documents relevant to an inquiry, she may, in some circumstances, issue a notice to a person compelling them to provide the information or documents. A failure to do so may result in a fine of up to $5,400.

Impact on franchising

The Ombudsman is unlikely to have a big impact on any franchisor/franchisee disputes. Importantly, the Ombudsman will not duplicate the operations of other government agencies, as its function is to work co-operatively with other government agencies and regulators and forward complaints to other agencies and regulators where those agencies are better-placed to address a complaint. Given the existing mediation process governed by the Franchising Code of Conduct and co-ordinated by the Federal government’s Office of the Franchising Mediation Adviser (OFMA), the Ombudsman will refer any franchising-related disputes to OFMA, which is better equipped to oversee the resolution of such disputes.


The Ombudsman’s powers are somewhat weaker than the ones floated in a discussion paper issued in May 2010, which suggested extending the Ombudsman’s powers to investigate small business disputes and compel the parties to attend mediation. These powers were not included in the legislation which was enacted in September 2015. While any assistance for small business in resolving disputes is to be welcomed, it remains to be seen how and to what extent the new Ombudsman will choose to utilise these powers and whether they will have a positive impact on small business.

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