The Australian Competition and Consumer Commission has commenced proceedings in the Federal Court in Sydney against Allphones Retail Pty Limited.
The ACCC alleges that, in operating this franchise system, Allphones failed to comply with Franchising Code of Conduct and engaged in misleading and deceptive conduct and unconscionable conduct towards its franchisees in contravention of sections 51AC, 51AD, 52 and 59 of the Trade Practices Act 1974.
Proceedings have also been taken against Allphones' director and Chief Executive Officer, Mr Matthew Donnellan; director and Chief Operating Officer, Mr Tony Baker; and former National Franchising Manager, Mr Ian Harkin, for allegedly being knowingly concerned in or party to the contravening conduct.
Allphones Retail operates a franchise system where it controls the distribution of all products and income to franchisees and negotiates agreements with third parties on franchisee's behalf. The ACCC alleges that Allphones engaged in conduct towards its franchisees in the operation of its franchise system including:
- implementing policies targeting classes of franchisees
- forcing franchisees to acquiesce to Allphones' will by threatening or engaging in a pattern of harsh conduct, and
- failing to disclose or pay certain income to franchisees
which in all the circumstances was unconscionable within the meaning of s51AC of the Act.
The ACCC also alleges that Allphones engaged in false or misleading and deceptive conduct towards potential and current franchisees. This includes allegations that Allphones misrepresented how it shares profits with franchisees, bargains with third parties on behalf of its franchisees and operates its franchise system.
Further, the ACCC alleges that Allphones contravened s51AD of the Act by failing to comply with clauses 6, 7, 11, 15 and 29 of the Franchising Code of Conduct.
The ACCC is seeking the following court orders:
- declarations that the conduct contravened sections 51AC, 51AD, 52 and 59 of the Act
- injunctions restraining similar conduct in the future
- the implementation of a trade practices training or compliance programs by Allphones, and
- costs.
A directions hearing will be held in the Federal Court before Justice Rares on 11 April 2008.
Past and present Allphones franchisees who have inquiries about these proceedings may contact the ACCC on 1300 302 502.