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In December 09, the ACCC initiated proceedings against Master Franchisor Mailpost Australia Limited (MPA), CEO & Director Peter Kritas and Sydney Sub-Franchisor Mailpost Postie Network Sydney (MPNS), of whom Mr Kritas is Secretary.
MPA was found to have committed misleading and deceptive conduct by preparing and providing recruitment materials to Sub-Franchisors alleging that the Mailpost business was not a Franchise and that Franchisees did not have rights under the Franchising Code. MPA further breached the TPA by making the same representations in seminars, promotional materials and verbally to Franchisees at seminars.
Further breaches were committed when MPA represented that the business included "iMailPost" and "Thunderprint" as revenue streams for franchisees, when in fact such revenue streams did not exist and were never introduced, the business was "recession proof" and was "probably the fastest growing franchise type operation in the whole world", and that regional franchisees of the Mailpost Business would earn or could reasonably be expected to earn “$180,000 pa". This was posted online at Seek.
Sub-Franchisor MPNS failed to provide a Disclosure Document to prospective Franchisees, failed to obtain a signed Acknowledgement of receipt and understanding of the Disclosure Document and Franchising Code, signed statements from Legal, Business and Accounting experts or alternatively a signed Acknowledgment from the prospective Franchisee that the Franchisor had recommended such advice but the prospective Franchisee had chosen not to seek it.
The Federal Court ordered Injunctions restraining MPA, MPNS and Mr Kritas from further breaches of the Code, copies of the Court Order and Reasons for Judgment to be provided to all Mailpost Franchisees, Trade Practice Compliance Training and Mr Kritas to pay a contribution to the ACCC’s cost.
WHAT THIS MEANS FOR YOU:
Franchisors, know your business. Even if you genuinely believe that you operate under a principal-agent relationship and therefore are not obligated to comply with the Code – this will not protect you. Ignorance is bliss, but it won't pay your ACCC costs.
Do not make statements regarding likely profits, future viability, future possible campaigns and revenue streams of the Franchise Business without reasonable grounds, heck, be safe and don’t make them at all unless your crystal ball still has a lengthy warranty.
Representations can be made verbally, in promotional materials and online as seen by the representations made on Seek.com. Are you aware of what is being released by Marketing and IT? All employees should undergo basic TPA compliance training.
Sub-Franchisors make your own diligent inquiries into the procedures imposed by your Master Franchisor.
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