The Australian Competition and Consumer Commission has settled its court action with the franchisor of Arnolds Ribs & Pizza Australia Pty Ltd with the Federal Court making orders by consent that Arnold's had contravened the Trade Practices Act 1974.
The franchisor agreed that it had engaged in misleading and deceptive conduct in the promotion of and negotiations for the sale of franchises.
The court also accepted that the franchisor had engaged in conduct which in all the circumstances was unconscionable.
The ACCC was also able to obtain $200,000 from the Arnolds franchisor for allocation to some affected franchisees.
"This will go some way to alleviate the suffering these franchisees had undergone", Acting ACCC Chairman, Mr Ed Willett, said today.
"People entering into franchises have the right to believe what the franchisor said. But people contemplating becoming a franchisee must, as always, be ever vigilant and do their homework.
"You must check all facts and obtain comprehensive legal and business advice - and to take heed of that advice".
The court declared that Michael Azzopardi, Robert Azzopardi, Phil Kilazoglou, Eric Chan and Bradley Oliver had aided, abetted, counselled or procured or were knowingly concerned in and a party to Arnolds contraventions.
The court made orders by consent restraining the Arnolds franchisor and the named individuals from making representations about:
- the experience required to run a fast food franchise;
- the profitability of Arnolds franchise businesses;
- the business support to be provided;
- the training to be provided;
- the capital that would reasonably be required;
- the nature and cost of the fit-out;
- the relationship between Arnolds and the person who is to undertake the fit-out; and
- the lifestyle to be expected by a franchisee including working hours
when these were untrue or misleading or deceptive.
Mr Willett said the case was against the franchisor and the ACCC did not have any issues with any current or former Arnolds franchisees.
The ACCC instituted legal proceedings in the Federal Court, Sydney in March 2002 after receiving a number of complaints about the conduct of Arnolds.