In the media

ACCC finds franchisors failing to outline rent, wages

The ACCC recently reviewed documents from 12 Australian food franchisors finding that franchisors are failing to disclose critical information. The ACCC is urging Australians not to buy a franchise if they can’t first speak with former franchisees and verify supplied information.

The lack of research done by prospective franchisees poses a huge risk with 40 per cent of franchisees reporting they did not seek external advice prior to entering into their agreements.

To read more, click here.

Update to warranty wording

As of 9 June 2019, the Australian Consumer Law (ACL) introduced mandatory wording in documentation for warranties against defects on services or a combination of goods with services

Previously, the ACL only prescribed set wording for warranties against defects for goods only, but this has been extended to mandatory text requirements for warranties against defects when supplying services or the supply of services combined with goods.

Contact

Please contact us if you or your business need:

• a review or update to your franchise disclosure document or are considering entering into a franchise agreement; or
• any advice regarding your contract terms, or assistance reviewing the terms of a contract you are about to enter into.

In Practice and Courts

Significant concerns with customer loyalty schemes

The ACCC released a draft report on 5 September 2019 into Customer Loyalty Schemes, which highlights a number of concerns where customer loyalty schemes must ensure they are not misleading consumers.

Customer loyalty schemes, including frequent flyer, supermarket and credit card operators, must ensure they are not misleading consumers according to an ACCC draft report.

For more information about the draft report, click here.

Case Law

Commonwealth DPP v Kawasaki Kisen Kaisha Ltd [2019] FCA 1170

An ACCC investigation into cartel conduct concerning the international shipping of cars, trucks and buses lead to Kawasaki Kisen Kaisha (K-Line), a global shipping company based in Japan, entering a guilty plea in the Federal Court to criminal cartel conduct.

The Federal Court found K-Line engaged in a cartel with other shipping companies in order to fix prices on the transportation of cars, trucks, and buses to Australia between 2009 and 2012.

The maximum penalty for K-Line’s conduct was 10% of K-Line’s agreed annual turnover relating to Australian business activities in the 12 months prior to the commencement of the offence, a potential penalty of $100 million. K-Line’s guilty plea was taken into consideration and it was fined $34.5 million. The Federal Court’s fine of $34.5 million is the largest ever criminal fine imposed under the Competition and Consumer Act.

ACCC Chair, Rod Sims said “this decision is a serious warning to businesses and will deter others seeking to join or start a cartel. Businesses should know that engaging in cartel conduct will result in ACCC scrutiny and result in potentially very serious consequences”.

For the Federal Court’s judgement summary, click here. 

For the full judgment, click here.