An attempt to end a franchise has led to Ray White (Real Estate) Pty Ltd giving the Australian Competition and Consumer Commission a court-enforceable undertaking for likely breaches of the Franchising Code of Conduct.
Nick Edwards operated a Ray White franchise out of Charleville, Queensland under a five-year agreement from December 2008. However in February 2010, Ray White announced that it was ending the agreement without giving any reasons.
"The Franchising Code of Conduct sets out a procedure that a franchisor must follow before it terminates a franchise agreement. Ray White did not follow this procedure," Acting ACCC chairman, Michael Schaper, said.
Ray White has acknowledged that it was likely to have contravened section 51AD of the Trade Practices Act 1974 because it did not tell Mr Edwards why it proposed to end the agreement, nor what was required to remedy any breach. Further, it did not allow him a reasonable time to remedy any alleged breach.
Dr Schaper said: "It is not good enough for franchisors to disregard their obligations under the franchising code of conduct."
He added that: "Franchisees such as Mr Edwards are entitled to the protection of the law and the ACCC will act to ensure that small businesses are not unfairly treated by large businesses."
After the ACCC became involved, Ray White began negotiations with Mr Edwards to settle the dispute.
In addition to resolving the matter with Mr Edwards, Ray White is required to set up a trade practices law compliance program and for senior staff to undertake practical training focused on requirements under the code.