COMMERCIAL LITIGATION UPDATE – COURT ORDERS ALLPHONE TO PAY $3 MILLION IN DAMAGES TO FRANCHISEES

In April 2010, the Federal Court of Australia declared that since 2004 Allphones engaged in misleading and misleading and deceptive conduct, breached the Franchising Code of Conduct and engaged in unconscionable conduct in its dealings with its former and current franchisees.  Amongst other allegations, Allphones made deductions from commission payments meant for franchisees in breach of franchise agreements.

The Court found and ordered that:

  • the franchisees be paid $3 million in damages for money that had been withheld;
  • 3 Allphones executives had been knowingly concerned in unconscionable conduct;
  • a number of injunctions be imposed to prevent similar conduct in the future; and
  • Allphones and its executives pay the Australian Competition and Consumer Commission (ACCC) costs of legal proceedings.

If your franchisor is not meeting its obligations under the franchise agreement, acting inconsistently with the Franchising Code of Conduct or not living up to its promises to you, we suggest you should check the terms of your agreements and raise your concerns accordingly.  Keep communications in writing as much as possible and good diary notes. If issues cannot be resolved in the first instance between you and the franchisor directly, promptly seek assistance from professional advisors or the relevant industry bodies. By taking these steps it could make a significant difference to your prospects of success in resolving dispute.

Our Dispute Resolution & Litigation team at Corney & Lind Lawyers can assist you, whether as franchisee or franchisor, as you navigate legal issues on your franchise journey. Our (dispute resolution  & litigation) lawyers have the in-depth experience and knowledge to guide you through this complex area of law.  If we can be of assistance, we would like to hear from you.

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