One of Australia's major car servicing and electronic tuning franchisors, Ultra Tune, will no longer 'lock-out' franchisees from their computer package following action by the Australian Competition and Consumer Commission.
"Ultra Tune Australia Pty Ltd has offered the ACCC court enforceable undertakings after the ACCC alleged that the company had supplied one of its franchisees with a computer software accounting package without disclosing that the software package contained a lock-out code," ACCC Chairman, Professor Allan Fels, said today.
"When this lock-out code activated on a pre-determined date the franchisee was unable to use the software system until supplied with a password by Ultra Tune.
"The ACCC also alleged that Ultra Tune subsequently informed the franchisee that it would not provide the password unless the franchisee agreed to sign a revised franchise agreement with a higher royalty fee.
"After investigation, the ACCC decided that Ultra Tune Australia Pty Limited had engaged unconscionable and misleading conduct that either breached, or risked breaching, the Trade Practices Act.
"Unconscionable conduct is a practice that will not be condoned," Professor Fels said. "Although the term unconscionable conduct is not defined in the Act, the provisions are founded on the equitable concept of unconscionability which involves exploitation by the stronger party of an evident special disability suffered by the other party.
"This means that companies must not take unfair advantage of their position by the use of pressure, including economic pressure, which goes beyond normal commercial negotiations. In this case, the ACCC alleged the franchisee was being unreasonably denied access to his own client and financial information important to his on-going business.
"Unconscionable conduct is a priority area for the ACCC, particularly where it relates to small business."
As a result of the ACCC's action, Ultra Tune has signed legally enforceable undertakings that it will:
agree that all franchisees supplied with the software package will continue to be supplied with the necessary passwords for the currency of their franchise agreements; prior to supply of the new software package fully inform franchisees about the existence or effect of any conditions; not place Ultra Tune franchisees under unconscionable pressure in the course of negotiating with them over the terms of their franchise agreements, the need for a new or revised franchise agreement, and for the provision of any computer system; introduce an ACCC approved trade practices compliance program, and a complaints handling system which meets the Australian Standard; apply to become subject to the Franchising Code of Practice; and. pay for trade practices seminars for all its franchisees.
"Ultra Tune Australia Pty Ltd has offered the ACCC court enforceable undertakings after the ACCC alleged that the company had supplied one of its franchisees with a computer software accounting package without disclosing that the software package contained a lock-out code," ACCC Chairman, Professor Allan Fels, said today.
"When this lock-out code activated on a pre-determined date the franchisee was unable to use the software system until supplied with a password by Ultra Tune.
"The ACCC also alleged that Ultra Tune subsequently informed the franchisee that it would not provide the password unless the franchisee agreed to sign a revised franchise agreement with a higher royalty fee.
"After investigation, the ACCC decided that Ultra Tune Australia Pty Limited had engaged unconscionable and misleading conduct that either breached, or risked breaching, the Trade Practices Act.
"Unconscionable conduct is a practice that will not be condoned," Professor Fels said. "Although the term unconscionable conduct is not defined in the Act, the provisions are founded on the equitable concept of unconscionability which involves exploitation by the stronger party of an evident special disability suffered by the other party.
"This means that companies must not take unfair advantage of their position by the use of pressure, including economic pressure, which goes beyond normal commercial negotiations. In this case, the ACCC alleged the franchisee was being unreasonably denied access to his own client and financial information important to his on-going business.
"Unconscionable conduct is a priority area for the ACCC, particularly where it relates to small business."
As a result of the ACCC's action, Ultra Tune has signed legally enforceable undertakings that it will:
agree that all franchisees supplied with the software package will continue to be supplied with the necessary passwords for the currency of their franchise agreements; prior to supply of the new software package fully inform franchisees about the existence or effect of any conditions; not place Ultra Tune franchisees under unconscionable pressure in the course of negotiating with them over the terms of their franchise agreements, the need for a new or revised franchise agreement, and for the provision of any computer system; introduce an ACCC approved trade practices compliance program, and a complaints handling system which meets the Australian Standard; apply to become subject to the Franchising Code of Practice; and. pay for trade practices seminars for all its franchisees.