Mailpost is a print and distribution business for unaddressed
promotional mail. In December 2009, the ACCC instituted proceedings
in the Federal Court in Sydney against Mailpost Australia Limited
(Mailpost), its director Mr Peter Kritas and its NSW sub franchisor
Mailpost Postie Network Sydney Pty Ltd (MPNS) for alleged breaches
of the Trade Practices Act 1974 (Cth) (the Act).
The ACCC argued that Mailpost and MPNS breached the Franchising
Code of Conduct (the Code) and section 51AD of the Act by failing
to provide prospective franchisees with a disclosure document. In
addition, the ACCC alleged that Mailpost and MPNS made a number of
false, misleading and deceptive representations to franchisees and
prospective franchisees including that:
the Mailpost business was not a franchise
the Franchisees did not have rights under the Code
additional franchise revenue streams would be provided to the
the business was "probably the fastest growing franchise
type operating in the whole world"
the business was "recession proof"
Mailpost has a number of corporate customers "on the
The ACCC sought orders including declarations that Mailpost
engaged in conduct that contravenes the Act with the knowledge of
Mr Kritas, injunctions, costs and the implementation of a trade
practices compliance program by Mailpost and MPNS.
Earlier this month, the Federal Court declared that Mailpost
founder Peter Kritas and Mailpost were both in breach of the Code
and granted each of the orders sought by the ACCC (above).
Warning to franchisors
This result serves as a clear warning to all franchisors,
highlighting the perils of failing to comply with the Franchising
Code. ACCC Chairman Graeme Samuels stressed that "the ACCC
will not hesitate to take court action against franchisors and
associated individuals that use misleading statements when
attempting to recruit new franchisees to a franchise
Franchisors are well advised to ensure that they comply with the
Code and if in doubt, are encouraged to seek independent legal
advice. Middletons provides full service franchise specific legal
advice to many franchised business in Australia and around the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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