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Co-operation between franchisees and franchisors in COVID-19

Posted by Elizabeth Gore-Jones on 27 April 2020

7-Eleven and franchisees authorised to co-operate on store opening times.

The ACCC has granted consent to 7-Eleven and its franchisees discussing temporary store closures because of reduced demand as a result of COVID-19 restrictions.

The reason consent was required is that 7-Eleven operates some of its own stores and as such is technically a competitor with some of its franchisees. If they had these discussions without seeking ACCC consent that could potentially breach competition laws.

The ACCC stated that it believed the co-operation could help the network and individual stores to remain viable during the pandemic.

The ACCC strongly recommended that the franchisees seek independent legal and financial advice when considering to adopt temporary measures include the option to close their stores temporarily in which event they may receive an ex-gratia payment from 7-Eleven to assist them in paying unavoidable costs and also, in circumstances where franchisees have an income guarantee from 7-Eleven that would be reduced pro-rata to reflect the reduction in trading hours.

The authorisation granted by the ACCC was conditional upon 7-Eleven notifying the ACCC of any arrangements reached so that the ACCC had some oversight.

The ACCC will be monitoring these arrangements and when it is appropriate for the authorisation to be revoked.

The authorisation grants protection in circumstances where action undertaken may be a breach of the Competition and Consumer act 2010.

You should consider if any arrangements you have breached with your franchisee or franchisor requires interim authorisation and thus providing protection against court action in certain circumstances.

*This blog is for information purposes only, you should obtain your own legal advice for your circumstances.

Author: Elizabeth Gore-Jones
About: Elizabeth specialises in franchising law. She lectures at Bond University PLA in franchising, she sits on the Queensland Law Society Franchising Committee, she is a past member of the Women in Franchising committee and a past member of the Franchise Council of Australia.
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