The Australian Competition and Consumer Commission has filed Federal Court action against oil major Shell Company of Australia, alleging unconscionable conduct against a Shell franchisee and false and misleading representations.
The ACCC alleges that Shell misrepresented the nature of the tenure under a Shell FORCE Franchise Agreement. It further alleges that the franchisee, relying on these representations bought the franchise and subsequently suffered significant losses as a result of unconscionable conduct by Shell.
The allegations centre on a Gold Coast franchise site operated by Mr John Bird and his wife, Karen. Although the franchise agreement contained a one plus five year tenure, the franchisees were advised by Shell that they effectively held an 11 year tenure as the agreement would be extended. It is alleged that Shell later reneged on the additional five year tenure resulting in a substantial devaluation of the business.
The ACCC further alleges that Shell took advantage of its power as franchisor, knowing of the special disadvantage the franchisees were experiencing. The special disadvantages arose from Shells representations that :
the franchisees should sell as their future looked bleak; their price support could be reduced; Shell was opening a new service station nearby; and Shell may close an ancillary business essential to franchise viability.
The representations above, coupled with the substantial devaluation of the franchise, induced premature termination of the FORCE franchise agreement at substantial loss to the family run business.
The ACCC is taking representative action seeking compensation for loss or damages, injunctions and declarations.
A directions hearing will be held in Brisbane on 6 December 1996 at 10am.
