A landlord's conduct has been declared unconscionable and in breach of the Franchising Code of Conduct by the Federal Court.
The court has issued consent orders that the franchisor, Suffolke Parke Pty Ltd and its director, Mr Gregory George Bradshaw, had acted unconscionably toward its tenant. The court has declared also that the company and Mr Bradshaw had breached the Franchising Code of Conduct by refusing to attend mediation.
The action was taken on behalf of the franchisee, D&J Shannon Pty Ltd, by the Australian Competition and Consumer Commission.
"At the time of the conduct Suffolke Parke Pty Ltd was the master franchisee in South Australia for The Cheesecake Shop", ACCC Chairman, Professor Allan Fels, said today. "It leased out premises at 686 Anzac Highway, Glenelg, to Shannon which operated a Cheesecake Shop franchise business from the premises. Part of the leased premises was a separate shop, which Shannon had been permitted to sublet on previous occasions.
"It was alleged that following disputes between the parties over franchising matters, in October 2000 Mr Bradshaw refused to allow Shannon to again sublet the shop. This was allegedly in reprisal for complaints arising from actions taken by Shannon and other Cheesecake Shop franchisees concerning his conduct as a director of the master franchisee for SA. Further, when Shannon sought to go to mediation on the issue, as is his right under the mandatory Franchising Code, Mr Bradshaw refused to attend.
"Landlords must deal honestly with their tenants, particularly when they are also in other business relationships with them", Professor Fels said. "A landlord who is also a franchisor or master franchisee may not use its leverage over a tenant/franchisee to punish him for querying the manner in which the franchise business is conducted. The mandatory Franchising Code requires that parties in dispute over a franchising matter must attend mediation if one of them lodges a complaint with the Office of the Mediation Advisor".
The Australian national franchisor, Mamuska The Cheesecake Shop Pty Ltd, was not involved in the conduct by Suffolke Parke Pty Ltd and Mr Bradshaw, which are no longer associated with The Cheesecake Shop.
"The conduct that was the subject of the ACCC action was a landlord/tenant dispute and had nothing to do with The Cheesecake Shop franchise system.
"By consent, the court ordered injunctions against Suffolke Parke Pty Ltd and Mr Bradshaw and ordered that they pay $10,000 compensation to Shannon plus the ACCC's costs. The company is also obliged to enter into a trade practices compliance training program.