West Aust Couriers Pty Ltd, trading as Fastway Couriers (Perth), has paid a $9,000 penalty after the ACCC issued an infringement notice for alleged non-compliance with the Franchising Code of Conduct (Franchising Code).
Fastway Couriers (Perth) is the West Australian regional franchisor of the Fastway Couriers franchise.
The ACCC alleged Fastway Couriers (Perth) breached the Franchising Code by providing a disclosure document that did not include details of former franchisees that had terminated or transferred their courier franchises to a prospective franchisee. This information is required by the code to be included in each disclosure document.
“The ACCC is sending a clear message that it will act to ensure prospective franchisees receive the information required by the Franchising Code so that they are able to make informed decisions about the purchase of a franchise,” ACCC Commissioner Sarah Court said.
“The ACCC has recently taken enforcement action against franchisors who the ACCC alleges are in breach of the Franchising Code, in order to educate franchisors and send a strong message that all franchisors must comply with the code.”
Fastway Couriers (Perth) has also provided the ACCC with a court enforceable undertaking to address the ACCC’s concerns that it had made false or misleading representations regarding the future earnings of courier franchisees by advertising an “income guarantee” of $1,500 per week for 30 weeks to prospective franchisees.
The ACCC was concerned that prospective franchisees would understand this representation to be the likely income they could therefore expect to earn at the end of the stipulated period.
The company has undertaken to provide actual earnings information to prospective franchisees, and not to describe the offered financial support as an “income guarantee” in future marketing of its courier franchises.
A copy of the undertaking is available on the ACCC website.
Background
On 1 January 2015, the revised Franchising Code came into effect. The revised Code introduced financial penalties and infringement notices for serious breaches of the code.
The ACCC can issue an infringement notice where it has reasonable grounds to believe a franchisor has breached certain obligations under the Franchising Code. The payment of a penalty specified in an infringement notice is not an admission of a breach of the Franchising Code.
Under the Franchising Code, the franchisor must provide a disclosure document, the franchise agreement (in its final form) and a copy of the Franchising Code at least 14 days before commencement of the agreement.
The disclosure document must include information about a number of important matters including financial details of the franchisor, operating costs and fees, contact details of current and former franchisees, the business experience for the past 10 years of each officer of the franchisor, whether there is an exclusive territory, and conditions for renewal and termination. Businesses can access further information on the Franchising Code from the ACCC website.