Ultra Tune’s Appeal Dismissed: Importance Of Compliance With Franchising Code Of Conduct

In January 2025, the Full Federal Court dismissed an appeal by Ultra Tune Australia Pty Ltd (Ultra Tune), upholding the March 2024 decision that fined the company $1.5 million for four instances of contempt of Court.

These charges for contempt resulted from Ultra Tune’s earlier failure to comply with court orders made in 2019, which required it to implement a compliance program following previous breaches of the Australian Consumer Law (ACL) and the Franchising Code of Conduct (Code).

The matter has been ongoing for a long time with our comments and further background on the original decision dating back to 2019.

Timeline of proceedings against Ultra Tune

A brief timeline of the proceedings can be found below.

2017: ACCC commenced proceedings against Ultra Tune for contraventions of ACL and the Code.

2019: Penalties were imposed of $2.604 million, then subsequently reduced to $2.014 million on appeal. Ultra Tune was also required to implement a compliance program and had an injunction made against it restraining it from contravening particular provisions of the ACL and the Code.

2022: ACCC commenced proceedings that Ultra Tune were in contempt of the court and had failed to comply with the orders made in 2019.

March 2024: Ultra Tune was fined $1.5 million for contempt of court, which was appealed by Ultra Tune.

January 2025: The Full Federal Court dismissed the appeal by Ultra Tune and upheld its decision to impose $1.5 million in fines against Ultra Tune.

Basis of Ultra Tune’s most recent appeal

Ultra Tune made its appeal based on:

1. Lack of endorsement: The Company argued that the Court lacked the authority to impose penalties for contempt because the original orders did not specify the consequences of non-compliance.
2. Calculation of fines: Ultra Tune contended that the fines were calculated incorrectly.

The Full Federal Court rejected both arguments, affirming the original decision.

What does this mean for franchisors?

The ACCC Commissioner, Liza Carver, expressed satisfaction with the Court’s decision, emphasising the importance of compliance with the Code to protect franchisees.

While the appeal related to fines for contempt, referring back to earlier failures, the appeal highlights that Franchisors need to comply with laws and the ACL. If there is a failure, then Franchisors must address them, ensuring that the same failings do not happen again.

As highlighted by the decision in the original case, Franchisors should always ensure they do three things:

1. Franchisors must be aware of their obligations and timeframes under the Code (and we note these are changing from 1 April, 2025).
2. Franchisors must make sure that relevant and complete disclosures are made at the required time to potential franchisees and existing franchisees.
3. Franchisors must continue to act in “good faith” and do not make false or misleading representations.

If you are unsure of your obligations as a franchisor or relevant time frames under the Code, please contact our franchise team.

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.