The Australian Competition and Consumer Commission has commenced proceedings in the Federal Court in Brisbane against Seal-A-Fridge Pty Ltd and its director, Mr Nigel Rooney.
The ACCC alleges that Seal-A-Fridge engaged in unconscionable conduct towards its franchisees in contravention of section 51AC of the Trade Practices Act 1974. The ACCC also alleges that Seal-A-Fridge failed to comply with the Franchising Code of Conduct, which amounts to a contravention of section 51AD of the Act. The ACCC alleges that Mr Rooney was knowingly concerned in the contraventions.
Seal-A-Fridge is the franchisor of a mobile refrigeration seal replacement business which is run by franchisees located around Australia.
The ACCC alleges that Seal-A-Fridge engaged in conduct which was, in all the circumstances, unconscionable within the meaning of section 51AC of the Act including:
- unreasonably withholding consent to the transfer of franchises
- unilaterally increasing the fees associated with the national Seal-A-Fridge telephone number contrary to franchise agreements, and
- disconnecting franchisees from the national Seal-A-Fridge telephone number to procure agreement to the increased fees.
Further, the ACCC alleges that Seal-A-Fridge contravened the Franchising Code of Conduct and therefore section 51AD of the Act by failing to provide adequate disclosure to franchisees prior to them entering into franchise agreements. It is alleged that Seal-A-Fridge later failed to provide current disclosure documents to franchisees after receiving written requests.
It is also alleged that Seal-A-Fridge contravened the Franchising Code of Conduct and therefore s51AD of the Act by unreasonably withholding consent to the transfer of a franchise.
The ACCC is seeking the following court orders:
- declarations that the conduct of Seal-A-Fridge contravened sections 51AC and 51AD of the Act and that Mr Rooney was knowingly concerned in the contraventions
- injunctions restraining Seal-A-Fridge and Mr Rooney from engaging in similar conduct in the future
- that Seal-A-Fridge implement a complaint handling system
- that Mr Rooney attend relevant trade practices training
- that Seal-A-Fridge write to each of its franchisees notifying them of the orders made by the Court, and
- costs.
A directions hearing will be held in the Federal Court before Justice Logan on 25 July 2008.
Past and present Seal-A-Fridge franchisees who have inquiries about these proceedings may contact the ACCC on 1300 302 502.