The Federal Court has imposed a $2,604,000 penalty against Ultra Tune Australia Pty Ltd (Ultra Tune) for breaching both the Franchising Code of Conduct and the Australian Consumer Law (ACL).
Justice Bromwich found that Ultra Tune had failed to act in good faith in breach of the Franchising Code, and had made false or misleading representations in breach of the ACL, in its dealings with a prospective franchisee.
Australia’s Franchising Code of Conduct needs strengthening to better protect franchisees, including significantly increased penalties for breaches, and requiring improved and more meaningful information disclosure to franchisees. These changes, in combination with stronger unfair contract terms (UCT) law, would help to improve the operations of franchise businesses in Australia.
ACCC Deputy Chair Mick Keogh called for these changes in a speech delivered today at the National Franchise Convention Legal Symposium in Melbourne.
ACCC Deputy Chair Mick Keogh addresses the Franchise Council of Australia’s National Conference regarding the ACCC’s role in franchising, its submission to the Franchise Inquiry and some recent enforcement actions.
ACCC Deputy Chair, Mick Keogh, told the Parliamentary Joint Committee on Corporations and Financial Services Inquiry into the Franchising Code of Conduct:
The ACCC welcomes the opportunity to appear before the committee of Inquiry today.
While recognising the benefits associated with franchise business models, we also recognise the vulnerability of franchisees due to the significant personal and financial investment they commonly make, paired with the imbalance of power that can exist between franchisee and franchisor.
Luxottica Franchising Australia (Luxottica), the franchisor of eyewear retailers OPSM and Laubman and Pank, has committed to be more transparent about the structure and operation of its franchise system to franchisees.
The commitment follows an ACCC investigation that found Luxottica’s marketing fund financial statement and disclosure document were unlikely to comply with the Franchising Code of Conduct.
Luxottica cooperated with the ACCC’s inquiries and voluntarily committed to change the documents to give franchisees a more open and transparent account of the business.
The ACCC has accepted a court enforceable undertaking from Husqvarna Australia Pty Ltd after the outdoor power products subsidiary admitted it likely misled its franchisees when it stated that the Franchising Code of Conduct (FCC) did not apply to their contracts.
The ACCC took action over concerns Husqvarna’s “dealership agreements” may have contravened provisions of the FCC, and consequently section 51ACB of the Competition and Consumer Act (CCA), and made misleading representations in breach of the Australian Consumer Law (ACL).
Nearly 5000 small businesses reported various issues to the ACCC last year, with the most common areas of concern being alleged misleading conduct, consumer guarantees issues and wrongly accepting payments.
The ACCC took seven enforcement actions, including five for alleged breaches of the Franchising Code. It also did 29 compliance checks to ensure adherence with the franchising, horticulture, and food and grocery industry codes.
In his annual CEDA address, Chairman Rod Sims launched the ACCC's 2018 Compliance and Enforcement policy. This year, the ACCC will focus on consumer issues in broadband services and energy, competition in the financial services and commercial construction sectors, systemic consumer guarantee issues, and conduct that may contravene the new misuse of market power and concerted practices provisions.
The Federal Court has ordered Pastacup franchisor Morild Pty Ltd (Morild) to pay penalties of $100,000 for breaches of the Franchising Code of Conduct (Franchising Code), following ACCC proceedings. The company’s co-founder and former director, Mr Stuart Bernstein, has also been ordered to pay $50,000 for being knowingly concerned in the breaches.
Mr Bernstein co-founded the Pastacup franchise in 2008 and has managed and been a director of two previous franchisors of the Pastacup franchise system that each became insolvent.
Car manufacturers need to step up to meet their consumer guarantee obligations under the Australian Consumer Law (ACL) and stop putting the squeeze on dealers through dealer agreements, policies and procedures, ACCC Chairman Rod Sims told the 2017 Australian Automotive Dealer Association National Dealer Convention in Sydney today.