The Australian Competition and Consumer Commission has filed an action in the Federal Court against Stephen Frederick Grant, director of Brisbane based franchisor The Furniture Wizard Pty Ltd (in liquidation), for allegedly aiding or abetting or being knowingly concerned in breaches of the Trade Practices Act by the company.
Complainants allege they were induced to pay an average of $48,500 to enter into franchise agreements operating mobile furniture repair businesses. The Furniture Wizard Pty Ltd went into liquidation March 1999. The ACCC alleges that at that time there were 31 franchises nationally: Queensland 16, Western Australia five, Victoria four, New South Wales three and South Australia three.
The ACCC action follows allegations by four franchisees that they had been lured into purchasing business franchises as a result of advertising and promotional representations which were either untrue or made with reckless indifference. These include false or misleading representations concerning the:
- gross or net profits that could be expected from operating a franchise;
- extent of work required of franchisees to produce these profits;
- existence and level of demand for these services;
- existence and identity of genuine and established clientele;
- level of assistance to be provided to franchisees.
The ACCC alleges that these claims had no basis and were misleading in breach of the Trade Practices Act 1974. It also alleges most of the franchisees businesses had failed. They lost not only their money but also months of fruitless work in trying to build businesses which had no prospect of success.
All the allegations relate to franchising operations run by Mr Grant, not to individual franchisees or repairers who may still be operating using the Furniture Wizard name.
The ACCC is seeking both interim and permanent injunctions, declarations that franchisees have suffered loss or damage, findings of fact, and orders for compensation and costs. A directions hearing has been set for 18 November 1999 at 9.10 a.m. in the Federal Court, Adelaide.