Franchising investigations

The ACCC investigates alleged breaches of the Franchising Code or the Competition and Consumer Act 2010 and can take enforcement action where appropriate.

Investigation process

When a complaint is received about an alleged breach of the Code or the Competition and Consumer Act 2010, the ACCC:

  • undertakes a preliminary assessment. An initial interview with the complainant may be necessary as part of this assessment.
  • often recommends mediation as the first step in dealing with a franchising dispute where this process might reasonably facilitate an outcome acceptable to both parties.
  • where the complaint is assessed as substantive, it is progressed to an ACCC enforcement officer. At this stage, further information and evidence will be sought from both parties.
  • may escalate the matter to an in-depth investigation

Decisions about what action, if any, to take in response to a complaint are made in line with the ACCC's Compliance and Enforcement policy.

Breaches of the Franchising Code

The ACCC uses a range of compliance and enforcement tools in order to encourage compliance with the Code. In deciding which tool (or combination of tools) to use, the ACCC takes into account a broad range of factors, which are outlined in the ACCC’s Compliance and Enforcement Policy.

Enforcement tools for resolving concerns include:

  • administrative resolutions (e.g. the party in breach agrees to stop the conduct and compensate those affected)
  • court enforceable undertakings under section 87B of the Act
  • infringement notices (available from 1 January 2015)
  • initiating court action (financial penalties of up to $63,000  from 1 July 2017)

The ACCC or an individual can take court action to enforce the Code. Other orders a court can make include:

  • injunctions to stop the conduct or to require some action to be taken
  • compensation and damages
  • disqualification orders to prevent directors from managing corporations for a period of time.

Recent franchising actions taken by the ACCC

2019

Geowash (former franchisor)

Allegations: unconscionable conduct, false or misleading representations and breaching the Franchising Code good faith provision in relation to the sale and marketing of its franchises.

Outcome: A hearing to determine penalties and other orders sought by the ACCC will be on a date to be fixed by the Court.

News release: Court finds former car wash franchisor Geowash acted unconscionably

Ultra Tune Australia

Allegations: false representations in breach of the Australian Consumer Law and breaching the Franchising Code good faith provision in its dealings with a prospective franchisee.

Outcome: Federal Court ordered penalties.

News release: Ultra Tune to pay $2.6 million penalty

2018

Husqvarna

Allegations: potential misleading conduct and unfair contract terms under the Australian Consumer Law and potential non-compliance with the Franchising Code.

Outcome: Husqvarna provided a court enforceable undertaking

News release: Franchisee rights denied in Husqvarna code breach

2017

West Aust Couriers, trading as Fastway Couriers (Perth)

Allegations: potential non-compliance with the Franchising Code regarding certain disclosure obligations; false or misleading representations as to future earnings under the Australian Consumer Law.

Outcome: infringement notice and West Aust Couriers provided a court enforceable undertaking.

News release: Fastway Couriers (Perth) pays penalty for alleged Franchising Code breach

Morild (Pastacup)

Allegations: breaches of the Franchising Code in relation to disclosure.

Outcome: Federal Court declarations, ordered penalties and injunctions

News release: Pastacup to pay $100,000 for breaches of new Franchising Code

Domino’s

Allegations: potential non-compliance with the Franchising Code by failing to provide franchisees with both an annual marketing fund financial statement and an auditor’s report within the time limits prescribed under the Code.

Outcome: two infringement notice penalties.

News release: Domino’s pays penalty for alleged Franchising Code breach

2016

SensaSlim

Allegations: false representations, misleading and deceptive conduct.

Outcome: Federal Court ordered penalties and disqualification orders.

News release: Peter Foster banned for life from weight loss, franchise industries and managing corporations

2015

South East Melbourne Cleaning (formerly Coverall Cleaning Concepts South East Melbourne Pty Ltd)

Allegations: unconscionable conduct, false or misleading representations, breaches of the Franchising Code

Outcome: Federal Court declarations and penalties.

News release: Federal Court orders $500,000 penalty for cleaning franchise

2014

Express Mobile Services

Allegations: potential false or misleading representations and potential non-compliance of the Franchising Code.

Outcome: Express Mobile Services provided a court enforceable undertaking.

News release: Express Mobile Services gives undertaking in relation to alleged misleading representations

Taxsmart

Allegations: false representations, misleading and deceptive conduct.

Outcome: Federal Court declarations and orders by consent.

News release: Taxsmart to repay franchise fees for misleading conduct

2011

Allphones

Allegations: breaches of the Franchising Code, misleading and deceptive conduct, unconscionable conduct

Outcome: Federal court ordered interim injunctions (2009), Court ordered damages, injunctions (2010) and penalty for contempt of court (2011). 

News release: $3 million in damages to small businesses and Allphones penalised $45,000 for contempt of court

2010

Ray White

Allegations: potential breaches of the Franchising Code

Outcome: court enforceable undertaking

News release: Ray White provides undertaking after complaint of breach of franchising code

Seal-A-Fridge

Allegations: unconscionable conduct and breaches of the Franchising Code

Outcome: Federal Court declarations and orders

News release: Court finds Seal-A-Fridge franchisor's behaviour 'unconscionable'

Mailpost (Master Franchisor in NSW)

Allegations: breaches of the Franchising Code

Outcome: Federal Court declarations and orders by consent

News release: Mailpost founder and NSW master franchisor fail franchising code

Refund Home Loans

Allegations: misleading and/or false representations.

Outcome: Federal Court declarations and orders by consent.

News release: Refund Home Loans and Wayne Ormond admit false and misleading statements

More information

Franchising code of conduct

Undertakings register

Compliance and Enforcement policy