ACCC institutes against alleged franchising contraventions

The Australian Competition and Consumer Commission has instituted legal proceedings against Kyloe Pty Ltd, Impact Design Accessories Pty Ltd and associated persons alleging contraventions of the Franchising Code of Conduct and section 51AD of the Trade Practices Act 1974.

The ACCC alleges that Kyloe, Impact and associated persons in promoting and operating the Polar Krush Ice drink franchise:

• failed to provide franchisees with a disclosure document
• provided earnings information that was not based on reasonable grounds
• failed to provide franchisees with a 7 day-cooling off period
• prevented prospective sub-distributors from associating with and contacting other franchisees
• failed to request written statements from prospective franchisees that they had/had not received independent advice, and
• failed to provide an internal complaint handling procedure in agreements.

The ACCC further alleges that the contraventions are a direct consequence of the respondent's failed attempt to contract out of the Franchising Code of Conduct by calling its contracts "sub-distribution agreements" rather than franchise agreements.

The ACCC is seeking:

• declarations
• injunctions
• orders
• findings of fact, and
• costs.

A directions hearing has been set for 18 August 2006 before Justice Tracey.

This proceeding relates to the business agreement between the franchisor and franchisees, not the quality or provision of the Polar Krush Ice drink.