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Log In / Register | Jul 15, 2018

ACCC Asks Poolwerx The Tough Questions?

Poolwerx Corporation has recently lodged a third line forcing notification to the ACCC.

The notification and subsequent correspondence can be found here.

Essentially, Poolwerx wants to force its franchisees to purchase their goods and services from a very small list of nominated suppliers.

They wish to force zees to buy only one brand of pump, one brand of chemicals, vehicle etc. To purchase other goods or to sell an alternative brand of pump can result in termination.

For those unfamiliar with Poolwerx, the business consists of servicing pools and retailing chemicals and equipment so it is not the case that the franchisor needs to ensure consistency of a final product such as in food retail franchising.

What is interesting is the questions that the ACCC has asked the franchisor in order to evaluate the claim.

These questions include what kind of disclosure is made to franchisees regarding rebates received from suppliers, how suppliers are appointed and reviewed and how Poolwerx plans to ensure that Suppliers do not inflate their prices to franchisees and how franchisees can remain competitive.

For example:

2. Does PoolWerx provide information to franchisees about rebates received beyond the acknowledgement in Clause 11 of its Franchise Agreement? Specifically, are franchisees informed of the level of rebates received by PoolWerx in relation to specific products franchisees are required to purchase from approved suppliers?

It must be noted That Poolwerx has NOT alerted its franchisees to the existence of this notification and this is partly the purpose behind my post.

It must also be noted that the franchisor refuses to disclose to franchisees the AMOUNT of rebates by hiding behind the requirements of the Franchising code of conduct.

Australian BMM readers  may be interested but probably not surprised that the ACCC at this stage does not have access to the Disclosure Document, the Franchise Agreement or the contracts between the franchisor and its Suppliers.
One wonders how they can make any kind of informed decision when they are relying only upon what the franchisor tells them is so.

The other purpose behind my post is to generate some discussion about third line forcing and when it may or may not be appropriate in franchising and to ask for suggestions of arguments that can be used to prevent this notification from being accepted.

An entire networks profitabilty rests on this decision yet the franchisor prevents any discussion from taking place.

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