The ACCC has instituted proceedings against franchisor Jump Loops Pty Ltd and its parent company Swim Loops Holdings Pty Ltd (collectively Jump Swim) in the Federal Court, alleging that it made false, misleading or deceptive statements about Jump Swim School franchises, in breach of the Australian Consumer Law.
The ACCC is seeking views on its proposal to implement a class exemption that would allow small businesses to collectively negotiate with their suppliers and processors, and franchisees and fuel retailers to collectively negotiate with their franchisor or fuel wholesaler, without first having to seek ACCC approval.
The ACCC has successfully prosecuted former hand car wash and detailing franchisor Geowash in the Federal Court for acting unconscionably, making false or misleading representations, and failing to act in good faith in breach of the Franchising Code of Conduct in relation to the sale and marketing of its franchises.
The ACCC began investigating Geowash in late 2015, and subsequently launched court proceedings. In a decision handed down on 8 February, the Court found that Geowash made false or misleading representations on its website by:
Café, restaurant and take away food services industries will be the target of the ACCC’s next round of Franchising Code compliance checks.
The ACCC has responsibility for regulating the Franchising Code of Conduct in Australia, which includes conducting an active compliance check program.
“The ACCC receives more franchising code related reports from café, restaurant and take-away food franchisees than any other sector, and for this reason franchisors operating in this sector will be the target of our next round of checks” Deputy Chair Mick Keogh said.
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.