ABOUT THE CONTRIBUTOR

Simone Pentis
Simone Pentis Simone Pentis is the Managing Director, Advantage Partners Lawyers & Corporate Counsel, The Coffee Club Group. Simone is a specialist corporate & commercial lawyer, with a particular focus on franchising, intellectual property and business sales. Simone has advised private individuals, council, public & private companies throughout Australia & overseas, acted for established national & international franchisors. Simone has been involved in the design & establishment of various franchise systems, as well as the management of these companies daily legal issues. Simone has for a number of years held the position of elected committee member of the Franchise Council of Australia’s ('FCA') Qld Chapter Committee & the Chair of their Legal sub-committee. Simone also is an appointed committee member to the Qld Law Society’s specialist Franchising Committee. Simone has in Australia and internationally given and/or organised conferences, presentations and facilitated discussions on various legal, contract, intellectual property, franchising, sponsorship, marketing and business topics, as well as having been invited to repeatedly speak on 4BC radio.

Simone Pentis has written 44 article(s) for us.

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News Update – Get Prepared the ACCC are Taking Action

July 6, 2017 | Simone Pentis

Earlier this year in May, the Australian Competition and Consumer Commission (“ACCC”) issued its first infringement notices for alleged breaches under Australia’s updated Franchising Code of Conduct (“Code”) that resulted in civil penalties being paid by a Franchisor.  What this means for Franchisors is that the ACCC are ready to take action, and under the updated Code have more rights and abilities to take action and/or seek penalty payments.

In this particular situation, Domino’s Pizza Enterprises Limited (Domino’s) have now paid $18,000 in fines, on the basis of two ACCC infringement notices alleging that Domino’s failed to provide its Australian franchisees with a financial statement for the company’s marketing fund and an auditor’s report within the required time frames prescribed under the Code.

The Code requires franchisors that have marketing or other co-operative funds to supply annual financial statements to franchisees of any funds they are required to contribute to, and to do this within 4 months of the end of the financial year, with audit reports of these funds to also be completed and provided to franchisees within 30 days of the relevant review, subject to certain exceptions set out in the Code.

In a public release issued by the ACCC on the 8th May 2017, the ACCC Deputy Chair Dr Michael Schaper  stated that “Ensuring small businesses receive the protection of industry codes is an enforcement priority for the ACCC.”

The ACCC have the right to issue an infringement notice where it has reasonable grounds to believe that a person has contravened certain requirements of the Code and set out an amount payable as the relevant penalty within such notice.

While Domino’s has paid these penalties, it should however be noted  that payment of a penalty specified in an infringement notice is not itself an admission of a contravention of the Code.

So what does this mean for Franchisors. In short it is a strong reminder to ensure Franchisors are aware of and meeting their Code obligations, and if the ACCC comes knocking they have kept easily accessible the records and material to promptly support their compliance.