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Log In / Register | Jul 15, 2018

Poolwerx Third Line Forcing Wars: The Revenge of the Coprolith

Poolwerx Franchisees are dismayed and worried now that the ACCC has allowed the Poolwerx third line forcing notification to stand.

 (coprolithnoun:  a hard mass of dried feces, a dried up "JOB")

Just an as example of the competence of the ACCC, the two letters posted on the public register are dated 9/10/09. Perhaps thats why the ACCC makes so many decisions that no one can fathom. They have the ability to travel forward in  time.

The letter to Deacons uses some interesting phrasing:

"Summary of ACCC considerations Having considered the notification and submissions from PoolWerx and franchisees, the ACCC does not intend to take further action in this matter at this stage on the basis that it is not apparent that the likely benefit to the public from the notified conduct would not outweigh the likely detriment to the public resulting from the conduct.

I had to re read through those double negatives a few times just to get what they were saying.

In reaching this position the ACCC accepted that as with many franchise systems there is a benefit in arrangements that promote consistency in quality of products across franchise networks. In this instance PoolWerx has sought to achieve this through its approved supplier arrangements which it considers to be a cost effective means of ensuring that standards with respect to quality and consistency are met. The ACCC noted PoolWerx's submission that the approved supplier arrangements may facilitate relevant products being supplied more cheaply than would otherwise be the case and provide incentives for suppliers to offer greater levels of service and training.

I still cannot fathom this bit. I cannot see how having ONE manufacturer for pumps, ONE manufacturer of filters etc can encourage those suppliers to offer greater levels of service and training.These suppliers know we can only sell their pumps if we wish to sell any pumps. Franchisees are now captive customers with no choice at all now when it comes to providing their clients with the most appropriate product.

However, the ACCC also noted that rebates payable to PoolWerx by approved suppliers may result in any cost savings to franchisees not being as large as they could be absent the rebates.

Regard was also had to the ongoing competition provided by the manner in which approved suppliers are selected and reviewed, and PoolWerx's interest in approving suppliers that ensure that its franchisees are supplied on competitive terms.

As with any notification, please note that the ACCC may act to remove the immunity afforded by this notification at a later stage if it is satisfied that the likely benefit to the public from the conduct will not outweigh the likely detriment to the public from the conduct.

This assessment has been made on the basis that PoolWerx will disclose all relevant terms and conditions to current and prospective franchisees. In particular I note that PoolWerx is required to comply with the disclosure requirements of the Franchising Code of Conduct in relation to the notified arrangement. Among other things, these specify that a franchisor must provide information to franchisees in its disclosure document about: - any restrictions on acquisition of goods or services by the franchisee from other sources - whether the franchisor or an associate will receive a rebate or other financial benefit from the supply of goods or services to franchisees, including the name of the business providing the rebate or financial benefit and - whether any such rebate or financial benefit is shared directly or indirectly with franchisees.

More generally I would note that the Franchising Code of Conduct also requires disclosure of: - ownership by a franchisor or an associate of a franchisor of an interest in any supplier from which the franchisee may be required to acquire goods or services - any restrictions by a franchisor on the goods or services that a franchisee may supply and - any restrictions on the persons to whom a franchisee may supply goods or services. A copy of this letter has been placed on the ACCC's public register.

Again the ACCC seems to have ignored franchisees who claim that disclosure of rebates was misleading and deceptive. The ACCC are relying on the franchsing code of bad conduct to discharge any duties they may have to franchisees. The ACCC have also ignored the decisions they have made in other cases and not used them as a precedent for this decision and have ignored the pleas of franchisees to hold a conference prior to their final decision.

Something I find terribly confusing is that Poolwerx have been engaging in third line forcing for quite some time and that the lodging of the notification was in response to franchisees indicating they wished to pursue legal action over the third line forcing.  The ACCC states that they have made their assessment on the basis that Poolwerx will disclose all terms and conditions to CURRENT and prospective franchisees yet the franchisee submissions indicated this was not the case.

 What good is disclosure if you have already purchased the franchise ?


Related Reading:

Accc Asks Poolwerx The Tough Questions?

Third Line Forcing Wars: The Poolwerx Saga Continues

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