Franchise builder reviews practices after ACCC action
The franchisor of G.J. Gardner Homes, Netdeen Pty Ltd, and its directors, have given court enforceable undertakings after an Australian Competition and Consumer Commission investigation into allegations that the franchisor had misled former franchisees.
G.J. Gardner Homes is a residential building franchise with approximately 100 franchises operating in Australia and overseas. As part of the undertaking, Netdeen and its directors, Greg Gardner, Darren Wallis and Joanne Harris, are offering compensation totalling $40,000 to two former franchisees affected by the conduct.
The investigation followed complaints that Netdeen made misleading representations about the benefits of the franchise to prospective franchisees between 2004 and 2006, including the significance of its buying power, and some specific capabilities of its building management software system. These representations have not been substantiated, and the ACCC considers such conduct is likely to breach section 52 of the Trade Practices Act 1974.
Netdeen and its directors have taken steps to resolve the ACCC's concerns. In addition to the compensation, Netdeen has also undertaken to implement a number of corrective measures, including the review of its corporate materials, publishing corrective notices on its website and in a franchising magazine, and the establishment of a trade practices compliance program.
"It is pleasing that Netdeen and its directors cooperated with the ACCC to achieve this outcome, which has included redress to two affected franchisees," ACCC acting chairman, Peter Kell, said today.
"This matter serves as a timely reminder to franchisors to ensure that promotional materials are accurate and truthful, and prospective franchisees are not misled. The consequences of misinformation and ill-informed people purchasing and entering any franchise are simply bad for business – for both the franchisor and the franchisee."