More ACCC Franchisor Court Action

The ACCC has sought leave to commence proceedings against Geowash Pty Ltd.

These proceedings with allege:

1. false or misleading representations;
2. unconscionable conduct;
3. failure to act in good faith.

The action will be against the director and national franchising manager of the franchisor also.

The ACCC will allege:

• the franchisor made representations of earning and profit capacity of franchisees when the franchisor had no grounds to make those claims;
• the franchisor made representations it had business relationships with a number of car brands which it did not; and
• a substantial proportion of franchisee funds were used for purposes not permitted under the franchise agreement and not disclosed to franchisees including commission payments to the franchisor's director and national franchising manager.

The ACCC investigated the franchisor after receiving complaints from franchisees.

If leave is granted the ACCC has indicated it will be seeking declarations, injunctions, pecuniary penalties, orders for non-party consumer redress, corrective notice orders and costs together with orders disqualifying the director and national franchising manager from managing corporations for 5 years.

take away:

1. directors may be personally pursued for infringements;

2. employees may be personally pursued for infringements;

3. franchisors should ensure they are acting within the legal requirements placed upon franchisors;

4. we may soon start to see a body of law in relation to the good faith provisions under the Franchising Code of Conduct

Note: this alert is based on media release number MR 81/17 released by the ACCC today.