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Franchisor Cops Court Penalties

Posted by Elizabeth Gore-Jones on 10 January 2018

Amongst other things, the franchisor for the Pastacup franchise system and its director have been ordered to pay the following pecuniary penalties:

1. the franchisor is to pay $100,000; and

2. the franchisor's director is to pay $50,000.

Both the franchisor and its director must pay the legal costs of the ACCC in the amount of $12,000.

These orders were made because the court found that the franchisor and its director should have disclosed that the director was previously a director of 2 companies who had previously been franchisors of the Pastacup franchise system and they had been wound up because of insolvency.

Learnings: Franchisors should disclose all relevant information in disclosure documents to meet their obligations.

 

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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