Allphones Retail Pty Limited has undertaken to the Federal Court to stop negotiations with franchisees until it has fulfilled certain obligations.
The undertakings follow Australian Competition and Consumer Commission seeking urgent interlocutory orders against Allphones after the ACCC alleged misleading and deceptive conduct and alleged breaches of the Franchising Code of Conduct.
As a result, Allphones franchisees are better protected in their negotiations to settle a dispute between the company and franchisees.
The ACCC's application alleged that Allphones had breached section 52 of the Trade Practices Act 1974 by sending a Position Paper to its franchisees which was misleading or deceptive. The ACCC also alleged that Allphones had breached the Franchising Code by refusing to allow franchisees to sell their business, when the ACCC alleged that Allphones was not entitled to withhold its consent to such a sale.
The ACCC sought urgent interlocutory orders requiring Allphones to correct and disclose particular information to franchisees relating to the Position Paper. It also sought orders stopping Allphones from refusing to allow its franchisees to sell their businesses to third parties in particular circumstances.
In response, Allphones gave undertakings to the court. A copy of those undertakings is attached. In summary Allphones has undertaken:
- that it will not engage in negotiations or mediation with any Allphones franchisee without first providing a statement of the amounts Allphones has received each year which relate to issues 3 and 4 of Allphones Notice of Dispute issued 29 August 2008. It will also provide to franchisees a statement clarifying certain parts of the Allphones Position Statement regarding the Optus Bonus and Optus Super-Bonus and the Hoy decision
- to send a notice to franchisees which addresses what the ACCC alleged were misleading representations made by Allphones in the Position Paper regarding particular bonuses which Allphones received, and the extent to which they were passed on to franchisees, and the Hoy decision
- to include in any settlement agreement negotiated as part of process provided for in the notice a seven day cooling off period from the time Allphones provides the franchisee a copy of a report detailing the amounts Allphones has received
- to not withhold consent to the assignment of any Allphones franchise of the basis that the existing franchise has not and will not release Allphones from liability in respect of the issues the subject of the notice
- to give the ACCC seven days of notice in writing when it intends to refuse to consent to the assignment of an Allphones franchise to a franchisee on the basis that the assignee will not enter into a form of franchise agreement that is different to the assignor's franchise agreement.