After an extensive investigation by the ACCC, Bakers Delight
has been cleared of unconscionable conduct in relation to its
franchise operations. Middletons' partners Chris Nikou
(Franchising) and Murray Deakin (Competition & Regulatory)
worked with Bakers Delight to defend the claims that related to
the treatment of former franchisees.
After Bakers Delight produced voluminous information and
documents to the ACCC and took a very proactive role in dealing
with the issues of concern raised, the ACCC announced on 22
April 2008 that it had decided to take no further action in the
matter, having found:
no evidence that Bakers Delight had engaged in
unconscionable conduct or any breach of the Franchising Code
no evidence of any widespread or systematic problem of
compliance within the Bakers Delight franchise system;
no evidence of churning within the Bakers Delight
"You always take an ACCC investigation seriously, even
when you think you have not crossed any boundaries," Mr
Deakin said. "When you add in the complexity of the
Franchise Code it becomes a very big deal for a company.
"In Bakers Delight's case, we were able to work
with the client to prove to the ACCC that none of the
substantive allegations were in fact true."
The ACCC looked at a number of claims by disgruntled former
franchise holders and investigated allegations of
churning' and collusion with banks'.
"Bakers Delight has been dragged through the mud in
this case and it has attracted plenty of media attention,"
Mr Nikou explained. "In the end, when a franchise is
terminated for whatever reason, there is always a chance that
someone will be upset.
"Bakers Delight is a quality business with best
practice processes and documentation around its franchise
system, and it was this in the end that held it in good stead
in this investigation.
"The ACCC in the end endorsed some Bakers
Delight's practices, stating in its media release that
the evidence supports the view that Bakers Delight is generally
reluctant to initiate termination and does not have a record of
repeatedly selling franchise sites'.
"The investigation has highlighted the paramount
importance of franchisors having in place:
first class systems and procedures to manage and support
a network of franchisees
franchise agreements, disclosure documents and associated
agreements which strictly comply with the latest Franchising
Code of Conduct requirements
ongoing access tospecialist franchising and trade
practices law expertise and experience
continuous communications with franchisees, particularly
in relation to the expression of any concerns by
an open and positive dialogue with the
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In some cases these fees or surcharges are higher than what a bank charges to these merchants for use of the system.
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