Bob Jane falls foul of the ACCC
3 mins reading time
Tyre and car maintenance retailer, Bob Jane Corporation Pty Ltd (Bob Jane), has fallen foul of the Australian Competition and Consumer Commission (ACCC). The well-established franchise has provided the ACCC with a court-enforceable undertaking after failing to meet the Franchising Code of Conduct.
The ACCC raised concerns with the company regarding its compliance with end of term and renewal of franchising agreements. Specifically, Bob Jane neglected to communicate whether it would renew or extend franchising agreements at least six months before they were set to expire.
The Franchising Code requires franchisors to notify franchisees of their intentions, in writing, regarding the end of a franchising agreement, at least six months before it is due to end. The one exception to this occurs where the term of the agreement is less than six months, in which case the franchisor only needs to provide one month’s notice. As noted by the ACCC, “This is an important obligation as it allows franchisees to make informed decisions about the future direction of their business.”
In addition to failing to meet this obligation, in some instances Bob Jane also extended the term of franchise agreements without adhering to legal requirements around the provision of disclosure documentation to franchisees and its receipt of a written statement verifying that those franchises had received and understood that documentation.
Bob Jane has agreed in its undertaking to rectify these issues moving forward. Specifically, Bob Jane will not terminate a franchise agreement operating under interim arrangements without meeting the mandatory notice period. It will also ensure that it receives written confirmation from franchisees that disclosure documentation has been received, read and understood before taking further action. As a final preventative measure, Bob Jane will initiate and maintain a three-year compliance program.
The ACCC’s scrutiny regarding Bob Jane’s conduct is a timely reminder for franchisors to review their compliance processes. Franchisees rely on transparency regarding what will happen at the end of the term of their franchising agreement and the onus is on the franchisor to ensure that any actions it takes will be communicated clearly, via writing, within the prescribed timeframe.
It is wise to regularly check your policies and procedures to ensure that you are meeting your legal obligations under the Code – and being fair to your franchisees.
If you would like to discuss any concerns you have around meeting your obligations under the Franchising Code, particularly at this uncertain time, please contact Macpherson Kelley’s Franchising team for assistance.
The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.
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Bob Jane falls foul of the ACCC
Tyre and car maintenance retailer, Bob Jane Corporation Pty Ltd (Bob Jane), has fallen foul of the Australian Competition and Consumer Commission (ACCC). The well-established franchise has provided the ACCC with a court-enforceable undertaking after failing to meet the Franchising Code of Conduct.
The ACCC raised concerns with the company regarding its compliance with end of term and renewal of franchising agreements. Specifically, Bob Jane neglected to communicate whether it would renew or extend franchising agreements at least six months before they were set to expire.
The Franchising Code requires franchisors to notify franchisees of their intentions, in writing, regarding the end of a franchising agreement, at least six months before it is due to end. The one exception to this occurs where the term of the agreement is less than six months, in which case the franchisor only needs to provide one month’s notice. As noted by the ACCC, “This is an important obligation as it allows franchisees to make informed decisions about the future direction of their business.”
In addition to failing to meet this obligation, in some instances Bob Jane also extended the term of franchise agreements without adhering to legal requirements around the provision of disclosure documentation to franchisees and its receipt of a written statement verifying that those franchises had received and understood that documentation.
Bob Jane has agreed in its undertaking to rectify these issues moving forward. Specifically, Bob Jane will not terminate a franchise agreement operating under interim arrangements without meeting the mandatory notice period. It will also ensure that it receives written confirmation from franchisees that disclosure documentation has been received, read and understood before taking further action. As a final preventative measure, Bob Jane will initiate and maintain a three-year compliance program.
The ACCC’s scrutiny regarding Bob Jane’s conduct is a timely reminder for franchisors to review their compliance processes. Franchisees rely on transparency regarding what will happen at the end of the term of their franchising agreement and the onus is on the franchisor to ensure that any actions it takes will be communicated clearly, via writing, within the prescribed timeframe.
It is wise to regularly check your policies and procedures to ensure that you are meeting your legal obligations under the Code – and being fair to your franchisees.
If you would like to discuss any concerns you have around meeting your obligations under the Franchising Code, particularly at this uncertain time, please contact Macpherson Kelley’s Franchising team for assistance.