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Sir Nicholas Scott: This approach to franchising developed on the other side of the Atlantic and, like so many other trends, favourable or unfavourable, it came to this country first--perhaps because of the commonality of language. As my hon. Friend rightly says, the approach is likely to spread, and perhaps it has already spread, to the retailing sector in many other EU countries. Perhaps a Union-wide approach will be necessary to tackle the matter.
The Bill will provide powers to exclude from its provisions such schemes as may be provided by order, and that mechanism could be used to exclude various types of franchise schemes. The Minister for Competition and Consumer Affairs has said that the Government intend to use that power to exclude franchise schemes in which only one UK participant can benefit from the activities of others. Therefore, the Bill will result in a lightening of control of UK franchise schemes with only a single tier. I am advised that most multi-layer franchise schemes are already subject to the controls, but that is being contested by Mr. Bigmore and Mr. Mendelsohn and will not be affected by the legislation.
I appreciate that some multi-layer schemes such as those in which franchisees do not sell goods or services provided by the franchiser and those in which most of the sales are made on premises where the franchiser or franchisee carries on other business are outside the present controls.
As I said earlier, my familiarity with the franchising industry is somewhat limited, but it would be anomalous if we did not seek to control multi-layer schemes.The need to protect members of franchise schemes and others is important, but how that is provided, whether through regulations or by other arrangements, is not for me to say. However, we would be lacking in sensitivity if we did not have regard to the needs of a large and growing sector of our economy, and we must carefully consider the representations of those who take a specialised interest in those matters. If those in franchising continue to be concerned, I hope that they will be carefully consulted about any regulations that flow from the Bill.
I hope that the House will give the Bill its wholehearted support. The Government support its principles and I have been assured that they do not intend to introduce any unreasonable regulations or restraints for trading schemes that are entirely legitimate and beyond criticism. Direct selling and franchising are large and fast-growing sectors of our economy. The House has a duty to ensure that the legislation properly reflects the need to ensure that those who are responsible for carrying on such businesses are not unduly hampered, but that people will be protected from those who use holes in existing legislation to run what are undoubtedly scams and tricks, to persuade people to part with their hard-earned money or redundancy payments.
Mr. Andrew Rowe (Mid-Kent):
I start by declaring an interest. The only outside interest for which I receive any remuneration whatever is that I am an adviser to Amway UK, which is one of the biggest direct selling companies in Britain. I assure the House that I spent much time thinking about it before I agreed to assist the company, because a connection with pyramid selling in even the most legitimate direct selling companies would cause any hon. Member to pause. I looked at how a reputable direct selling company operates before I agreed to be an adviser. I am glad that I did that, because I have learned a great deal about a field of endeavour about which I knew little before I took on the role.
As my right hon. Friend the Member for Chelsea(Sir N. Scott) said, this is a rapidly growing method of selling, but scams have caused huge distress to a substantial number of people who invested redundancy money or pensions and received nothing. One of the most common scams is that there is nothing whatever to sell, and that is absurd. When all the glamour and glitz of the west end hotel foyer or banqueting room were stripped away, people found that they were being asked to pay a substantial sum up front, in the hope that they could then con others into joining a scheme that had nothing whatever to sell. Sadly, the most vulnerable people are often the most desperate and they are easily persuaded that there is a crock of gold at the end of the rainbow.
Amway has tens of thousands of distributors throughout the land. Some of them work all the hours that God sends, and many husband-and-wife partnerships have managed to build substantial businesses. There are millionaires working for companies such as Amway, but the vast majority of workers are people who are trying to augment their incomes. Some vicars' spouses are augmenting the stipends of their husbands by toiling in a small way for the company, as such people do for many other direct selling organisations. Many of them are students who seek to augment their student loans.
Many people who get sucked into such an activity quickly find that they are temperamentally hopeless at it. One of the Bill's great advantages is that it will make it much harder for confidence tricksters and others to load such people up front with a huge stock of material that they are temperamentally unable or do not have the skill or assiduity to sell. In some instances, the stuff begins to depreciate or deteriorate the moment they take delivery of it. There has been little enforcement of any suggestion that the supplier should take it all back. Such behaviour has brought the entire direct selling operation into disrepute.
A similar difficulty may arise--indeed, it has arisen in Amway UK. Training materials are made available by companies within the Amway chain, and people who are not good at selling and who are temperamentally of the belief that, if they tried only a bit harder or seized on to the latest gimmick, their fortunes would be transformed, feel obliged regularly to buy the latest video, booklet or whatever and can easily build a substantial outlay for little return. Reputable companies in the Direct Selling Association, of which there are a substantial and growing number, are keen to ensure that people have a real opportunity to give back the materials that they purchased in good faith, but ill-advisedly, without losing large sums of money. My right hon. Friend's Bill will make such an improvement in standards even easier.
The Bill takes the best practice in what is an innovative and growing form of selling and is determined both to generalise that good practice and to outlaw bad practice. The bad practice varies from downright fraud to careless overselling to people who are incapable of determining whether they are in a good position. One can never entirely protect gullible people by legislation or any other means, but one can ensure that the damage to those people is limited as far as possible and that they do not get sucked into things which, on any examination, are regarded as totally crooked.
Therefore, my right hon. Friend has done the country a considerable benefit by introducing the Bill. I am delighted that the Government recognise the value of trying to tighten the whole system and that they have, by endorsing the Bill, clearly recognised that direct selling is here to stay and that it is one of the many new ways of getting goods to the customer which the retailing revolution is bringing about.
Many people would, for all sorts of reasons, prefer to buy from someone they know products that they have grown used to in their home. That is an admirable feature. It is also a way of doing business which, for the distributor, fits in extraordinarily well with the growing instability of the employment market. People who expect to go in and out of work during their lifetime may find it a great anchor to have, as part of their family income,the amounts of money that come in from providing a relatively small number of customers with a steady supply of products. That is an admirable way of trying to iron out the peaks and troughs of an employment record which, in the modern technological world, is unlikely to be the flat line, or the climbing graph, which most of my generation expected to enjoy when we left school or university.
For all those reasons, I commend my right hon. Friend for introducing his admirable Bill.
Mr. Andrew Robathan (Blaby):
As my hon. Friend the Member for Mid-Kent (Mr. Rowe) has said, this is an important issue. I am delighted to have the opportunity to speak on the measure. I just slightly regret that there does not seem to be much interest from the Opposition Benches. I know that the Opposition support it, but it is a pity--[Interruption.] I welcome the hon. Member for Newcastle upon Tyne, East (Mr. Brown). I hope we shall hear from the Opposition of their support for the Bill, but the empty Opposition Benches sit ill with the slogans that we hear about supporting business.
Mr. Paul Flynn (Newport, West):
The hon. Gentleman might realise that the reason for the empty Opposition Benches is that the Bill is entirely non-controversial and that it is not expected that any Member will speak against it. For that reason, Members hope that it will have a swift passage through the House this morning to allow hon. Members to consider in detail and come to a decision on other important Bills that are before us this morning.
Mr. Robathan:
Indeed. The hon. Gentleman has his own issue in the Bull Bars (Prohibition) Bill, which I believe is coming up later and which I also commend to the House. I do not think that the hon. Gentleman will find much objection, certainly not from me anyway, to his measure. At 10 o'clock this morning, he has plenty of time to look forward to that.
10.3 am
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