In addition to the much-publicised inquiry by the Parliamentary Joint Committee on Corporations and Financial Services and the resultant Fairness in Franchising Report handed down in March 2019, the franchising sector has continued to attract considerable media attention in recent months.
Several scandals involving different franchise brands have made headlines lately. Following is a summary of some of the more infamous franchise news stories including Michel’s Patisserie, Chatime and JUMP! Swim Schools.
The Parliamentary Joint Committee on Corporations and Financial Services on 14 March released its long-awaited report into Franchising. Franchisors should be cognisant of the recommendations made in this lengthy report and consider whether their business model needs adjustment to reflect the potential impact of the proposals and best practice generally. MST Lawyers have broken down the report highlighting some of the key recommendations.
In light of the recent successful prosecution of Geowash, franchisors should be vigilant in complying with their obligations under the Franchising Code of Conduct and the Australian Consumer Law, and in particular with their requirements to act in good faith, or risk attracting the attention of the ACCC which is intent on enforcing compliance in the franchise sector.
In one of the most important decisions affecting franchising in Australia, we examine how the Federal Court determined the number of contraventions and calculated the penalty of $2,604,000 imposed on Ultra Tune. MST Lawyers Principal, Philip Colman, steps through the key points in the decision handed down by Justice Bromwich.