Misleading disclosures of financial information to
A bunch of angry franchisees has lost its fight against
the Bank of Queensland (BOQ) over claims they were deceived into
buying their BOQ franchises. According to the franchisees (many of
whom had failing businesses), BOQ was misleading and deceptive
while negotiating their franchise agreements.
The franchisees claimed that, while wooing them, the rep for BOQ
made sweeping hypothetical comments about how to make their
franchise businesses profitable, but stayed silent on the actual
(poor) financial performance of existing franchises.
There is a simple rule when disclosing information, but in
particular to prospective franchisees: make sure it's correct.
We're sure Sam Frost wishes Blake the Bachelor had let her know
he wasn't in love with her before he proposed. It's easy
for franchisors to get this right though, thanks to the super
Code. But, we get it; franchisors have carefully scripted
marketing spiels for their reps to rattle off when luring new
franchisees. Despite how awesome this spiel may be franchisors need
to make sure that:
any representation made can also be found in the disclosure
the reps don't start adding extra love to the spiel by
including their personal opinion; and
reps are totally across what they can and can't say to
The BOQ franchisees lost their case because the Court of Appeal
found that BOQ didn't mislead or deceive them. The Court found
that the rep's comments weren't actual or reliable figures
and BOQ had been very clear about how to get information on the
performance of current franchisees. It helped that BOQ constantly
reminded the franchisees that it didn't make any predictions
about the possible success of their business. Top marks for
We do not disclaim anything about this article. We're
quite proud of it really.
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In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points.
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