ACCC does not consider Bakers Delight engaged in unconscionable conduct towards franchisees

Posted by Daniel Palmer on 23rd April 2008

The Australian Competition and Consumer Commission announced today that it had concluded its investigations into allegations that Bakers Delight engaged in misleading and deceptive and unconscionable conduct towards franchisees in operating its franchise system.

Having conducted an in-depth investigation, including analysing a large amount of documentary evidence and conducting a number of detailed interviews with various witnesses the ACCC has decided not to take any further action. This position has been informed by a number of conclusions:

  • the evidence assessed – in the ACCC’s view – did not demonstrate that Bakers Delight had engaged in unconscionable conduct or breached the Franchising Code
  • although there is no suggestion that the allegations made by the franchisees were made with any improper intent, in many cases, it was difficult to substantiate claims and in some cases information given was directly contradicted by documents and other evidence
  • there were a few circumstances where franchisees alleged that Bakers Delight representatives had made misleading verbal representations which investigations have neither substantiated nor dismissed. However in each of these cases, the ACCC considers steps taken by Bakers Delight to remedy the alleged wrongdoing were reasonable or other factors led to the losses suffered by the franchisees
  • there was no evidence produced to or obtained by the ACCC that – in its view – evidenced widespread or systematic problem of compliance within the Bakers Delight franchise system.

The ACCC does not ordinarily comment on individual complaints that it may or may not be investigating and tends to not to refer to outcomes that are not in the public arena.

However, given the substantial publicity surrounding the investigation, the ACCC considers it appropriate to provide some high level general comments on the Bakers Delight investigation.

“It should not be assumed that where there is smoke there is always fire,” ACCC Chairman, Mr Graeme Samuel, said today. “The ACCC is experienced in testing matters raised with it and often its investigations lead it to the conclusion that those matters cannot be substantiated or should not be pursued further.

“This said, given the bargaining disadvantage franchisees and other small businesses often find themselves in, where the ACCC forms the view that there is evidence supporting a claim that a franchisor has behaved unconscionably or in a systematic misleading manner it will take action.”

Notwithstanding the ACCC’s decision to take no further action in this matter, the ACCC is in continuing discussions with Bakers Delight with a view to ensuring its trade practices law compliance procedures and complaint handling processes are best placed to deal with issues that might arise in the future.

The ACCC notes that Bakers Delight cooperated with the ACCC throughout its investigation and met with a number of franchisees during the ACCC’s investigation to try and reach a negotiated resolution to their complaints.

The ACCC appreciates the assistance and cooperation of franchisees and Bakers Delight in the provision of information and a willingness to meet throughout the investigation.