Allphones tells Federal Court it will improve franchisee dispute process

Mobile phone chain Allphones Retail has undertaken to the Federal Court to improve its franchisee dispute resolution process after the Australian Competition and Consumer Commission alleged the company had been involved in misleading and deceptive conduct

Mobile phone chain Allphones Retail has undertaken to the Federal Court to improve its franchisee dispute resolution process after the Australian Competition and Consumer Commission alleged the company had been involved in misleading and deceptive conduct and breaches of the Franchising Code of Conduct.

The ACCC alleged that information provided by Allphones to franchisees in the context of its dispute resolution process was incorrect, incomplete and likely to mislead franchisees. The information related to the amount and nature of certain income received by Allphones under bonus agreements with suppliers. The watchdog was concerned that without correct information, franchisees could not be aware of what they might be giving up in agreeing to any dispute settlement.

The ACCC also alleged that Allphones had breached the code by refusing to allow franchisees to sell their business, when the ACCC alleged that Allphones was not entitled to withhold its consent to such a sale.

Allphones has now given several undertakings to the Federal Court, including:

• It will not engage in negotiations or mediation with any Allphones franchisee without first providing a statement of the amounts Allphones has received each year under certain bonus agreements with suppliers.
• It will send a notice to franchisees that addresses what the ACCC alleged were misleading representations made by Allphones in a position paper sent to franchisees regarding particular bonuses that Allphones received, and the extent to which they were passed on to franchisees.
• It will include in any settlement agreement negotiated as part of the dispute resolution process a seven day cooling off period from the time Allphones provides the franchisee a copy of a report detailing the amounts Allphones has received
• It will give the ACCC seven days notice in writing when it intends to block the sale of an Allphones franchise on the basis that the buyer will not enter into a form of franchise agreement that is different to the seller’s franchise agreement.

“As a result, Allphones franchisees are better protected in their negotiations to settle a dispute between the company and franchisees,” the ACCC said in a statement.

Allphones directors were not available for comment this morning.

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