The Federal Court has ordered Megasave Couriers Australia Pty Ltd (Megasave) to pay $1.9 million in penalties for making false or misleading representations to prospective franchisees, in proceedings brought by the ACCC.
Megasave’s sole director Gary Bourne has also been ordered to pay a penalty of $120,000.
In March 2021, the Court declared by consent that Megasave made false or misleading representations to prospective franchisees about guaranteed minimum weekly payments and guaranteed annual income, and that its sole director Gary Bourne was knowingly concerned in the conduct.
“Conduct of this kind warrants strong deterrent penalties. Many Megasave franchisees lost substantial savings and endured significant distress,” ACCC Deputy Chair Mick Keogh said.
“Franchisees made large upfront payments to purchase their Megasave franchise on the understanding that the business was low-risk and profitable but this was not the case.”
“Many franchisees left Megasave within a short time after either not receiving payments or receiving payments far less than was promised, losing their investment,” Mr Keogh said.
The Federal Court also ordered Megasave and Gary Bourne to pay $500,000 in partial redress for the losses suffered by affected franchisees. Any funds paid as redress are to be distributed equally between affected franchisees who purchased a Megasave franchise between September 2019 and July 2020.
Eligible franchisees will be contacted by the Australian Government Solicitor with further information by the end of July 2021.
“The ACCC took this action because misleading conduct in the franchising sector has the potential for devastating consequences for franchisees who rely on misleading claims by franchisors, and who may not have the resources or ability to enforce their legal rights,” Mr Keogh said.
“Franchisors are reminded that they must not make misleading representations to franchisees about the business they are buying, including about potential earnings or guaranteed income.”
Megasave is a franchised Australia-wide courier delivery business.
In July 2020, the ACCC instituted proceedings against Megasave and its sole director Gary Bourne.
On 19 June 2020, the ACCC obtained a Federal Court order freezing the assets of Megasave, Mr Bourne and other entities controlled by him. These orders were later replaced by an undertaking to the Court by Mr Bourne in broadly similar terms, and have now been revoked by the Court.
On 1 March 2021, the Federal Court ordered that Mr Bourne be disqualified from managing corporations for a period of five years, and ordered injunctions restraining Megasave and Mr Bourne from engaging in similar conduct in the future.
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