The practical consequences of unconscionable conduct by franchisors
The results of the Federal Court proceedings in ACCC v Allphones Retail Pty Limited [2011], give an insight into the operation of the unconscionable conduct provisions in the new Australian Consumer Law ( ACL). Declarations were obtained by the ACCC against Allphones, its CEO and COO for various contraventions of the TPA, including unconscionable conduct provisions. The types of conduct which the ACCC considered to be unconscionable conduct include:
- penalising franchisees who failed to meet KPIs without due consideration to individual circumstances of those franchisees, where such KPIs had not been appropriately communicated to them;
- issuing breach notices to franchisees for failing to follow Allphones' directions;
- engaging in conduct which effectively prevented franchisees from meeting KPIs;
- implementing a "no dickheads policy" pursuant to which the 10% of franchisees in the lowest performance bracket were issued with breach notices;
- threatening and fining or otherwise penalising franchisees; and
- requiring complete refurbishment of franchisee stores regardless of individual store's needs for complete fitout and the individual circumstances of the franchisees.
The themes in the Allphones case can easily be translated to the automotive industry and a number of other industries. In particular, the conduct complained of with regards to refurbishment of premises and unilateral imposition of charges or penalties on franchisees seems to be a topical one.
Some more information about this case can be found at http://www.hunthunt.com.au/download/publications/corporate-and-commercial/FranchisorsUnconsionableConduct.pdf
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