Health food and beverage retailer, Delicia Franchising, has admitted in an undertaking provided to the ACCC that it breached the Franchising Code of Conduct.
The undertaking was provided by Delicia Franchising after an ACCC investigation identified that Delicia Franchising’s annual marketing fund financial statements for the 2020, 2021 and 2022 financial years did not provide sufficient detail of the fund’s receipts and expenses, and were not provided to franchisees within 30 days.
As part of the undertaking, Delicia Franchising has committed to prepare annual marketing fund financial statements containing sufficient detail and provide them to franchisees within 30 days, as required under the code.
Delicia Franchising has also committed to issuing a corrective notice to its current franchisees informing them of the ACCC’s investigation and the commitments made in the undertaking, and to implement and maintain a compliance program for three years.
In addition, Delicia Franchising has paid a penalty of $11,100, after the ACCC issued it with an infringement notice in respect of its admitted failure to provide franchisees with a copy of its annual marketing fund financial statement for the financial year ending on 30 June 2022, in breach of the Franchising Code of Conduct.
“Franchisees often have to pay fees into a marketing fund operated by the franchisor, and the financial statements for these funds are important documents that allow franchisees to see how their money is being spent,” ACCC Deputy Chair Mick Keogh said.
“This enforcement action should serve as a reminder to the franchise industry that preparing sufficiently detailed marketing fund statements and providing them to franchisees are key requirements of the code.”
“We regularly conduct compliance checks on franchisors and we will continue to take appropriate enforcement action where we find franchisees are not receiving the protections of the code,” Mr Keogh said.
A copy of the undertaking can be found at Delicia Franchising Pty Ltd.
Background
Delicia Franchising is an Australian proprietary limited company and the franchisor of the ‘Delicia Acai + Protein Bar’ franchise, which is a health food and beverages bar.
Delicia Franchising began operating in 2018. There are approximately 10 ‘Delicia Acai + Protein Bar’ stores currently in operation.
The ACCC offers a free online course for anyone thinking about buying a franchise, and it includes questions to ask former franchisees. The ACCC website has detailed guidance about franchise marketing funds.
Under the franchising code, annual marketing fund statements are required if the franchise agreement requires franchisees to contribute to a marketing fund.
Note to editors
The payment of a penalty specified in an infringement notice is not an admission of a contravention of a mandatory industry code or the Australian Consumer Law.
The ACCC can issue an infringement notice when it has reasonable grounds to believe a person or business has contravened certain provisions in industry codes.