The Federal Court has ordered a franchisor to pay penalties of $100,000 for breaches of the Franchising Code of Conduct (Franchising Code), following Australian Competition and Consumer Commission (ACCC) proceedings. The company’s co-founder and former director, has also been ordered to pay $50,000 for being knowingly concerned in the breaches.
According to the ACCC, these are the first court ordered penalties for breaches of the new Franchising Code, and the significant penalties should send a strong message to other franchisors that they must meet disclosure obligations.
The Franchising Code requires franchisors to provide prospective franchisees with a disclosure document which contains important information about the franchise and the franchisor. Full and accurate disclosure by the franchisor is essential to enable prospective franchisees to make informed business decisions.
More information here.