Franchising

Court finds former car wash franchisor Geowash acted unconscionably

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:

ACCC to focus on franchisors' disclosure in the food services sector

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.

Small business in focus - 1 July to 31 December 2018

This twice-yearly report provides a summary of ACCC activities in the small business, franchising and agriculture sectors.

Ultra Tune to pay $2.6 million penalty

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.

Stronger penalties required for franchising codes and UCT laws

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 Opening Statement - Parliamentary Inquiry into the Franchising Code of Conduct

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 to improve transparency for franchisees

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.

Franchising, misleading behaviour continues to be an ACCC focus

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.