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It was predictable. The Australian Competition and Consumer Commission has stepped into the ring with a light weight franchisor claiming misleading and deceptive representations to franchisees. So why are we surprised?
The ACCC alleges has failed to deliver on representations made to franchisees and has attempted to operate a licence system when it is in fact a franchise and its business comes under the Franchise Code of Conduct and the regulator. PC4U at SmartCompany
Troy Patching, the sole director of Personalised Chocolates 4U, which has 45 franchises, says he is still trying to understand the ACCC's accusations, which were contained in a 70 page document served on him this week.
Many franchisees in Australia will not understand the reasoning behind the ACCC’s sudden interest in pursuing any franchisor. One of the issues raised repeatedly at the recent federal Franchising Inquiry was the constant of ACCC disinterest over a 10 year period where franchisors were given, and took, free reign over captive franchisees within rogue systems.
Bitter franchisees from networks across Australia have consistently claimed that the ACCC has denied its ability to investigate and demand incriminating evidence from franchisors that has otherwise been denied under-funded franchisees. In the PC4U matter the franchisor, Troy Patching, was ordered to ‘surrender important company documents, including bank statements and contracts.’
What we are seeing here is similar in strategy to the Franchise Council of Australia’s recent move to prettify their pathetic pre-contractual educational offerings to best ensure the Minister, Craig Emerson, allows them to save control over what information dominates the market while ensuring that the sharp end of complete franchising risk information remains hidden. This was FCA looking after FCA.
In the PC4U instance the ACCC have chosen to make an example of a franchisor for the Minister and an ever-critical media and a growing bipartisan sector of Australian federal politicians. Be clear on this; the goal isn’t to regulate, rather the ACCC’s predictable pursuit of another soft target should have been anticipated where the regulator has historically thrown a bone to pacify the critics when contempt of its performance boils over.
While this franchisor may allege his innocence I would be surprised if the ACCC got it wrong. They needed a sacrificial lamb and he will be considered a 'no brainer'. They had many to choose from and they chose him because they have to save face and win. Some things the ACCC take seriously. The ACCC is looking after ACCC.
All of Australian franchising now awaits the deliberations of Craig Emerson, the FCA and the ACCC as they struggle to decide on what is the least reform they can get away with in the face of growing anger within the sector while maintaining the status quo that leaves franchisees without real protection or access to justice. The Inquiry is over, the reform recommendations are gone and the Options Paper is on the table. Whatever they all come up with will no doubt be promoted as an industry panacea and will be widely criticised by everyone; including the FCA ... but just for effect.