The ACCC adopts a tough approach to rogue franchisors

“Is it the season to be jolly or not ?

The ACCC adopts a tough approach to rogue franchisors

Recently the ACCC has flexed its muscles in enforcing compliance with the franchising code of conduct and Australian Consumer Law

It took action against a regional franchisor trading as Fastway Couriers in Western Australia alleging that it did not provide relevant information about former franchisees who had either transferred their franchises or where the franchise agreement had been terminated in breach of the Code

It also took action to prevent that franchise from making misleading and deceptive representations about a so called “ guaranteed income “ to which the franchisees would be entitled

This is one of the first case where what was omitted from the disclosure document was an issue as by not providing the information the prospective franchisees were unable to make an informed decision about whether to enter into an agreement or not. The franchiser was fined a total of $9000 by way of the new infringement notice provisions

So far as the issue of misleading and deceptive conduct was concerned , the allegation was that by making statements about a “ guaranteed income “ of $1500 per week for 30 weeks the franchisor was representing that the franchisees would be achieving this each and every week after an initial 30 week period

The ACCC accepted an enforceable undertaking from the franchisor under section 87B of the Act that included provisions that it would not make such representations and inter Alia would provide accurate financials for the past 12 months about income and other facts

The moral of this sad and sorry tale is:

  • the accc is getting tough on breaches of the code and ACL
  • If you are a franchisor make sure the disclosure document is fully complete and compliant
  • Don’t make statements about prospective earnings ever
  • Use real and accurate financials

If this is of interest to you please contact David or Reuben on 1300 965 689 or (02) 4305 3500.

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Authored by

Raea Khan

Director Lawyer

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Raea Khan Circle
Director Lawyer
Raea Khan

Raea is Managing Director and Principal Lawyer for PBl Law Group. Raea assists clients with major projects, property developments, construction and strata law.

He has worked in Western Australia and Queensland assisting with expansion projects in the energy and resource sector and now predominately advises clients in Strata and Community Association matters.

He is a member of the Australian College of Strata Lawyers where majority of his work is advising developers and owners corporations with dispute related minor and major defects, strata governance and common property litigation. He is proficient at leading negotiations and meetings.

Raea has a particular interest in the commercial aspect of any dispute and always tries to weigh up the risk, reward and benefit of legal proceedings at each different stage.

Raea enjoys all forms of competitive sport, including Crossfit and actively participates in Triathlons, representing Australia as an age group athlete. He was a member of Red Head Surf Lifesaving club.

  • Strata Law
  • Construction & Major Projects
  • Commercial and Business Law
  • Planning & Environment Law