The Australian Competition and Consumer Commission has instituted legal proceedings in the Federal Court, Melbourne, against ContactPlus Group Pty Ltd and its sole director, Mr Arthur Spencer, alleging contraventions of the mandatory Franchising Code of Conduct and false, misleading and/or deceptive conduct in breach of the Trade Practices Act 1974.
ContactPlus operated a business selling licences to use its software and licensed marketing database to licensees to operate recruitment/employment service businesses.
The ACCC alleges that the ContactPlus licence agreements entered into between August 2000 and June 2001 are franchise agreements and ContactPlus has contravened the Franchising Code of Conduct and as a consequence section 51AD of the Act by failing to provide, among other things, proper disclosure documents to prospective franchisees; terminating franchise agreements without following the procedures provided under the Franchising Code of Conduct and providing other protection afforded by the code.
The ACCC also alleges ContactPlus and Mr Spencer breached sections 52, 53(a), (aa), (c), and (g) of the Act by making false, misleading and/or deceptive representations including representations that a licence fee of $60,000 was only payable in certain circumstances; it had a right to payment of the lump sum licence fee of $60,000 when no such right existed; that Licensed Marketing Databases were "fully qualified" when they were not; and representing on its website that ContactPlus would allocate a franchisee with an exclusive area when the terms of the agreement provided otherwise.
The ACCC is seeking a declaration that the licence agreements are franchise agreements and therefore subject to the code.
The ACCC is also seeking remedies against both parties including:
- injunctions restraining ContactPlus and Mr Spencer, for a period of three years, from engaging in similar conduct in the future
- an injunction and orders requiring ContactPlus and Mr Spencer to provide copies of the code and a disclosure document to current and prospective franchisees, as well as providing documents relating to these proceedings, for a period of three years.
In addition, the ACCC is seeking an order that ContactPlus implement a trade practices compliance program.
A directions hearing is listed for 29 September 2004 in the Federal Court, Melbourne before Justice Weinberg.