Franchising Code complaints, investigations and outcomes
The ACCC received over 500 complaints last year from consumers and businesses about franchising. We assess all claims that fall under our jurisdiction and will take strong action where necessary. However, many complaints we receive fall outside our jurisdiction or are of a private contractual nature, or there is insufficient evidence to substantiate a breach of the code or the Competition and Consumer Act 2010.
When we receive a complaint about the Franchising Code of Conduct, we will usually recommend mediation as the first and best option. However, if a party has failed to comply with the code or is using its superior bargaining power to disadvantage another party, we may decide to take action.
A preliminary assessment of the complaint is made, which may include an initial interview with the complainant to verify general information (e.g. contact details and the name of the trader). If the complaint is assessed as substantive, it is progressed to the next stage. However, in some instances the matter may be best addressed through dispute resolution.
We will generally recommend mediation as a first step in franchising disputes where this process might reasonably facilitate an outcome acceptable to both parties.
The matter is escalated to an ACCC enforcement officer and further information and substantiation of the allegations are sought from both parties. This may be by conducting interviews, obtaining and examining documents about the alleged conduct and careful application of the law to the known facts.
Additional evidence is collected and the matter is reviewed and analysed by senior enforcement staff. If the allegations can be substantiated by reliable evidence, the matter will generally be referred to the ACCC’s Enforcement Committee for consideration.
The committee is responsible for deciding on the most appropriate course of action, having regard to the impact that the action may have on the ongoing business relationship, the national market, relief available to affected persons and the value of precedent. The committee may elect to pursue the matter through litigation or resolve it by an administrative settlement.
Where the investigation of a matter has indicated serious breaches of the code and/or the Competition and Consumer Act and the matter is able to be substantiated with sufficient evidence, the ACCC can and does take decisive action.
Some matters pursued by the ACCC are listed below.
Alleged conduct: false representations, misleading and deceptive conduct
Status: the ACCC has instituted proceedings against Sensaslim and several of its officers
Date: July 2011
The ACCC has alleged that Sensaslim and several of its officers have engaged in misleading and deceptive conduct and made false representations in relation to the identity of Sensaslim officers, the Sensaslim Spray and the franchise opportunities offered by Sensaslim. The ACCC is seeking court orders including declarations, injunctions, penalties, compensation orders, orders that Sensaslim officers be disqualified from managing corporations in the future and costs.
In August 2011, the ACCC also instituted proceedings against Sensaslim's sole director Peter O’Brien alleging contempt of court.
Conduct: breaches of the Franchising Code, misleading and deceptive conduct, unconscionable conduct
Outcome: Federal Court declarations and orders by consent
Date: April 2010
55 current and former Allphones franchisees have received payments totalling $3 million from Allphones and its executives for their involvement in unconscionable conduct. By consent, Justice Foster of the Federal Court declared that Allphones executives Matthew Donnellan, Tony Baker and Ian Harkin were knowingly concerned in Allphones' conduct.
In July 2011, Allphones was also penalised $45,000 for contempt of court.
