'Can of worms': Franchising in the royal commission's sights

The scrutiny on the nation's $170 billion franchising industry is set to intensify as lending to the troubled sector is examined this week at the banking royal commission.

Franchising has already been under the spotlight after a series of scandals led to the establishment of a parlimentary inquiry, which is still underway.

The royal commission started two weeks of hearings in Melbourne on Monday considering small businesses and counsel assisting the commission, Michael Hodge, said several franchisees would appear before it.

"A number of case studies that we will deal with in the following two weeks deal with or involve
franchises," he said.

A theme of recent scandals has been that franchisees are left without enough money to live on once they pay interest on loans they took out to buy a store.

Former Australian Competition and Consumer Commission chairman Allan Fels, who ran the worker compensation scheme at 7-Eleven and led a taskforce into exploitation of migrant workers, said the move by the royal commission would be significant.

"It will open a can of worms," he said. Read more