Franchising

Federal Court orders $500,000 penalty for cleaning franchise

The Federal Court has ordered a $500,000 penalty against South East Melbourne Cleaning Pty Ltd (in liquidation) (formerly Coverall Cleaning Concepts South East Melbourne Pty Ltd) (Coverall Melbourne) for contraventions of the Australian Consumer Law (ACL), in proceedings brought by the Australian Competition and Consumer Commission.

Coverall Melbourne was the Victorian franchisor of a national professional cleaning franchise system.

ACCC releases latest small business report: new Franchising Code and online education highlight recent activities

Growing numbers of small businesses are looking to the Australian Competition and Consumer Commissioner for advice and guidance, according to latest data from the national competition & franchising regulator.

Over 7, 000 people have contacted the ACCC in last six months with a small business or franchising related complaint or enquiry, and more than 8,000 people have completed the ACCC’s three free online education programs for small businesses, tertiary students and franchisees. There were also some 333 000 visits to the ACCC’s business webpages over the same time.

Priorities 2015

In his first speech of the year, Chairman Rod Sims launches the 2015 edition of the ACCC’s Compliance and Enforcement Policy at CEDA in Sydney. Mr Sims announces cartel conduct in government procurement, truth in advertising, competition and consumer issues in the health sector and industry codes as new priorities. He also outlines the ACCC’s role in ensuring privatisation delivers for consumers, improving the functioning of the financial system given the competition focus of the Murray report, ensuring a smooth transition for consumers to NBN services and reviewing water rules to improve outcomes in the Murray-Darling Basin.

Key terms

Associate (of a franchisor)—a person:

(a) who:

(i) is a partner, director or related body corporate of the franchisor, or a director of a related body corporate or

(ii) for a franchisor that is a proprietary company—directly or indirectly owns, controls, or holds with power to vote, at least 15 per cent of the issued voting shares in the franchisor and

The ACCC’s approach to non-compliance

The ACCC’s Compliance and Enforcement Policy outlines the ACCC’s enforcement powers, functions, priorities and strategies and sets out the principles it adopts to achieve compliance with the law.

The ACCC determines the appropriate enforcement tools to address concerns on a case by case basis, taking into consideration the alleged contravention, the business involved and the impact of the conduct.

Breaches of the code

Who is liable for a breach of the Code?

While section 51AD of the Act prohibits businesses from contravening the Code, individuals can also be liable. Individuals’ liability can extend to the directors, the secretary, other officers or the board members of a company. Liability can also extend to employees of the company.

A person may be liable if they: