Awesome Water has been selling water coolers across Australia since 2003. Initially Awesome Water entered into delivery agreements with contractors to deliver water coolers in designated areas.
In 2006 Awesome Water restructured its business and established a franchise system for the purpose of delivering, servicing and repairing water coolers across Australia. In February 2008 the shares in Awesome Water were acquired by Allied Brands Limited.
The ACCC identified conduct by Awesome Water that revealed potential non-compliance with the Trade Practices Act 1974 (the Act) in:
the documentation provided by Awesome Water to franchisees;
the adequacy of Awesome Water’s disclosure documents;
the income level guarantee offered by Awesome Water;
representations by Awesome Water concerning franchisee income and working hours; and
the process relative to seeking of independent legal, accounting and business advice by prospective franchisees.
The ACCC acknowledges Awesome Water had started rectifying these issues in the transition period, and since the new owners took over the business. In response to the ACCC’s enquiries Awesome Water has offered and the ACCC has accepted a court enforceable undertaking.
For the purposes of section 87B of the Act Awesome Water will:
continue to provide current and prospective franchisees of Awesome Water with disclosure documents which comply with the Franchising Code of Conduct;
not enter into a franchise agreement with a prospective franchisee unless Awesome Water has received a signed statement that the prospective franchisee has received appropriate independent advice or been advised to seek such advice but has chosen not to;
ensure that its employees, agents and officers are aware that all verbal representations or information provided in addition to the disclosure documents to prospective franchisees are true and accurate;
ensure that all representations concerning prospective franchisees’ income are based upon actual performances of other full time franchisees over a 12-month period; and
implement a trade practices compliance program in accordance with Annexure A.
