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.
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