full federal court dismisses geowash franchise appeal
2 mins reading time
In 2019, the Federal Court found that Geowash Pty Ltd knowingly breached the ACL and Franchising Code. Geowash acted unconscionably towards franchisees through its charging practices for the establishment and fit-out of its franchise sites. Geowash further breached the Franchise Code by failing to act in good faith in relation to the sale and marketing of its franchises.
Investigations into the breaches found that Geowash’s former director Sanam Ali, and former franchising manager, Charles Cameron, were complicit and knowingly involved in Geowash’s offending conduct.
For these breaches, the Federal Court imposed $4.2m in penalties against Geowash, Ali and Cameron. The verdict also barred Ali and Cameron from managing a corporation for five and four years, respectively, in addition to ordering the two to each pay $500,000 to franchisees for the losses the franchisees had suffered as redress.
In response to the Court’s determination, Ali and Cameron appealed the findings that they were knowingly involved in Geowash’s unconscionable conduct and breaches of the Franchising Code. The pair also appealed the corporation ban and payment of penalties and redress.
The Full Federal Court rejected their arguments on 21 June 2021, with the appeal being entirely dismissed.
The Court unanimously agreed that the primary judge’s ‘characterisation of the system or pattern of conduct as unconscionable was founded upon deliberate deceptiveness and dishonesty’. In its findings, the Court stated that Geowash’s “so called ‘business model’ was a largely consistent approach to extract money from a group of people by falsely representing to them that moneys would be used in a particular way, when it was not intended to do so.”
The Court upheld the penalty and relief orders, confirming that Ali and Cameron were knowingly involved in Geowash’s unconscionable conduct and failures to act in good faith in breach of the ACL and the Code.
The dismissal of the appeal was welcomed by the ACCC, with the Deputy Chair, Mick Keogh, issuing a stark warning to would be offenders, as “franchisors are often in a position of power compared to their franchisees…the ACCC will continue to take enforcement action against those franchisors who exploit this power by engaging in conduct that is in breach of the Franchising Code and the ACL”.
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.
more
insights
stay up to date with our news & insights
full federal court dismisses geowash franchise appeal
In 2019, the Federal Court found that Geowash Pty Ltd knowingly breached the ACL and Franchising Code. Geowash acted unconscionably towards franchisees through its charging practices for the establishment and fit-out of its franchise sites. Geowash further breached the Franchise Code by failing to act in good faith in relation to the sale and marketing of its franchises.
Investigations into the breaches found that Geowash’s former director Sanam Ali, and former franchising manager, Charles Cameron, were complicit and knowingly involved in Geowash’s offending conduct.
For these breaches, the Federal Court imposed $4.2m in penalties against Geowash, Ali and Cameron. The verdict also barred Ali and Cameron from managing a corporation for five and four years, respectively, in addition to ordering the two to each pay $500,000 to franchisees for the losses the franchisees had suffered as redress.
In response to the Court’s determination, Ali and Cameron appealed the findings that they were knowingly involved in Geowash’s unconscionable conduct and breaches of the Franchising Code. The pair also appealed the corporation ban and payment of penalties and redress.
The Full Federal Court rejected their arguments on 21 June 2021, with the appeal being entirely dismissed.
The Court unanimously agreed that the primary judge’s ‘characterisation of the system or pattern of conduct as unconscionable was founded upon deliberate deceptiveness and dishonesty’. In its findings, the Court stated that Geowash’s “so called ‘business model’ was a largely consistent approach to extract money from a group of people by falsely representing to them that moneys would be used in a particular way, when it was not intended to do so.”
The Court upheld the penalty and relief orders, confirming that Ali and Cameron were knowingly involved in Geowash’s unconscionable conduct and failures to act in good faith in breach of the ACL and the Code.
The dismissal of the appeal was welcomed by the ACCC, with the Deputy Chair, Mick Keogh, issuing a stark warning to would be offenders, as “franchisors are often in a position of power compared to their franchisees…the ACCC will continue to take enforcement action against those franchisors who exploit this power by engaging in conduct that is in breach of the Franchising Code and the ACL”.