ACCC claims victory in case against chocolate franchisor

Posted by Editorial on 3rd December 2009

The Federal Court has declared that Personalised Chocolates 4U Pty Ltd and its sole director, Troy Patching, misled franchisees and engaged in conduct in breach of the Franchising Code of Conduct, the Australian Competition and Consumer Commission has advised.”The false and misleading statements made by Personalised Chocolates 4U were designed to entice work-from-home entrepreneurs to buy a franchise in circumstances where PC4U was unable to provide franchisees with promised software, training and support,” ACCC chairman Graeme Samuel suggested. “This outcome reminds all franchise owners that their promotional material must be truthful and accurate, and that it is illegal to accept payment for goods and services that cannot reasonably be provided.”

The court has made orders, by consent, declaring that PC4U breached sections 52, 53(c), 53(g) and 58 of the Trade Practices Act 1974 in relation to making false representations, and section 51AD of the Act relating to PC4U’s obligations under the franchising code. The court also declared that Mr Patching was knowingly concerned in all of those breaches of the Act and the code.

The conduct declared to be in contravention of the Act included:

* making false representations to PC4U franchisees that they would be provided with functioning software necessary for the operation of the franchise;
* making false representations to PC4U franchisees that they would be provided with a training manual for the operation of the franchise, at the time they became a franchisee;
* making false representations that a refund of franchise fees was available to franchisees when certain conditions were met, when it was impossible to meet some of those conditions and/or the time in which PC4U franchisees were able to seek a refund was not capable of being ascertained by PC4U franchisees;
* publishing statements on the PC4U website which represented that the persons giving testimonials had been franchisees of PC4U, when they had never been PC4U franchisees; and
* falsely representing that a business system being offered for sale by PC4U, which meets the definition of a franchise in the Franchising Code, is not a franchise.

Further, as part of the orders, the court has issued injunctions restraining PC4U and Mr Patching from engaging in similar conduct in the future.

In addition, PC4U has been ordered to:

* publish a corrective notice on its website
* send a letter to former and current PC4U franchisees advising each of them of the court orders
* implement a trade practices law compliance program and training, and
* pay a contribution to the ACCC’s court costs.