Express Mobile Services Australia Pty Ltd (Express Mobile Services) has provided an undertaking to the Australian Competition and Consumer Commission (ACCC) in relation to misleading representations to prospective franchisees.
The ACCC was concerned that Express Mobile Services engaged in misleading conduct and made misleading representations to prospective franchisees in brochures, on its websites and on other third party websites by:
- representing that services performed by its ‘Test & Tag’ franchises are a mandatory requirement, when this was not always the case in Western Australia;
- representing that no specific qualifications are required to operate franchises, when that was not the case in relation to the ‘Test & Tag’ and Pest Control franchises; and
- advising some prospective franchisees they would be provided with initial customers, when Express Mobile Services did not always have reasonable grounds for providing that advice.
The ACCC was also concerned that Express Mobile Services’ franchise agreement did not meet the requirements of the Franchising Code because they contained waivers of verbal or written representations.
To address the ACCC’s concerns, Express Mobile Services has provided the ACCC with a court-enforceable undertaking that it will:
- for a period of three years, not make representations about the nature, value, benefits of, or need for, a franchise without first obtaining independent verification from a lawyer or financial adviser;
- write to each franchisee stating it does not intend to enforce the waiver of representations clause (and offer to remove the clause) in it’s franchise agreement, and advising them of the ACCC website’s free online franchise education course;
- make changes to its website and existing advertising to remove any representations relating to the supply of initial customers; and
- establish and implement a Consumer Law Compliance Program, and maintain it for three years.
The undertaking given by Express Mobile Services serves as a reminder that franchisors must ensure that all representations they make to potential franchisees are true and accurate, including that they have reasonable grounds for making them. Prospective franchisees will always seek to rely on the accuracy of disclosure documents and representations made by the franchisor when they are deciding whether to purchase a franchise.
Authors:Trent Taylor and Lara Rush
Trent Taylor, Partner
T: +61 7 3135 0668
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