Megasave Couriers Australia Pty Ltd is a franchised Australia-wide business found guilty of misleading franchisees. Megasave is a relatively new Franchise system, it registered as a company in 2018 and claimed to be 'the newest and fasted genuine courier franchise opportunity'.
The Australia Competition and Consumer Commission (ACCC) obtained a Federal Court order freezing the assets of sole director of Megasave, Gary Bourne and other entities operated by him in June 2020. These orders where then replaced by an undertaking to the Court.
Megasave represented to prospective franchisees they would receive a guaranteed weekly payment of an average of $2,000 or an annual income of $91,000 if they purchased a Megasave franchised business. However, Franchisee's complained that the Franchisor was not paying the promised weekly or annual payments.
ACCC Deputy Chair, Mick Keogh, stated that, "We received many complaints from Megasave franchises who had relied on these representations when making a decision to pay many thousands of dollars for a franchise believing that buying a Megasave franchise would provide them with a secure future income." Mr. Bourne admitted there was no rational reasoning for making the false portrayal to potential franchisees.
The Franchising Code of Conduct states that Franchisors have a duty to provide accurate and true disclosure about a Franchised Business opportunity. Resulting in the Federal Court declaring that Megasave had breached the Australia Consumer Law by making misleading representations to prospective franchisees. Mr. Bourne is now prohibited to manage corporations for a period of five years!
The solicitors at IP Partnership Lawyers are well aware of the significant consequences for companies and executives who are involved in breaches of the Australian Consumer Law.
We are one of Australia's leading law firms when it comes to offering a complete, end-to-end solution for Franchisors. As a Franchisee, it is important to have one of our experienced lawyers review the Agreement for you to ensure you are not about to enter into a contract with terms that are not in your interest.
If you are a Franchisor, we will advise you to ensure your recruitment process and any advertisements comply with the Code and are not misleading or deceptive.
We will be watching closely, on 29 of April 2021, when a hearing is being held to determine the compensation for franchisees affected by Megasave.
We are fortunate in Australia that we have a regulatory body such as the ACCC who take active steps to protect parties (with potentially less resources) from being taken advantage of by Franchisors who blatantly disregard the Franchising Code of Conduct or Australian Consumer Law.
Again, it is another warning to Franchisors who have a 'do it themselves' attitude to preparing and issuing Disclosure Documents and Franchise Agreements that comply with the Franchising Code of Conduct in Australia is so incredibly important. The attempt to save money by not instructing solicitors or using consultants without legal qualifications may end up costing you a lot more in the long run.