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Franchisor in Court for Failing to Comply with Code

Posted by Elizabeth Gore-Jones on 23 September 2016

The ACCC issued a media release on 22 September, 2016 advising they have instituted proceedings against a franchisor and its former director for failing to comply with the Franchising Code of Conduct.

The Franchisor in question is Morlid Pty Ltd which is the franchisor for the Pastacup franchise system.

The Code requires a director of a franchisor to outline its relevant business experience.  The ACCC alleges  the director failed to disclose that he had been a director of 2 previous franchisor companies for the same franchise system who had become insolvent.

The ACCC is seeking penalties against the franchisor and the director personally, declarations, injunctions, findings of fact and costs.

The ACCC has stated that ensuring small businesses receive the protections of industry codes is a current enforcement priority.*

*This information is based upon the ACCC Franchising information network email of 22 September, 2016.

People are often surprised that proceedings can be instituted against a director personally.  It is a mistaken concept that it is possible for a director to hide behind a company.  There are a number of situtations in which a director can be held to be personally liable including in some instances for failing to comply with the Competition and Consumer Act and the Australian Consumer Law.

 

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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Tags: News Franchisor 2015 Code Changes

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