A judge has slammed both the dishonest conduct of mobile phone franchise Allphones and the dodgy actions of a franchisee in a Federal Court decision relating to withheld commission payments.
Franchisee Hoy Mobile launched legal action in 2006 alleging Allphones had unconscionably withheld commission payments Hoy was owed on mobile phone sales made in its Eastlake, NSW store.
But Allphones didn’t take the allegation lying down, claiming that Hoy had engaged in fraud by unlocking mobile phones and selling them for a higher price without informing the franchisee.
The result – a 16 day court case and 400-page decision that details the messy affair – is a classic example of just how bad things can be when a franchise relationship goes wrong.
Over 200 pages Federal Court judge Steven Rares sets out a litany of broken agreements, Franchising Code breaches, bad blood and ultimately fraud and unconscionable conduct between Hoy Mobile and Allphones.
He found that Allphones breached provisions of the Franchising Code almost from day one by not giving Hoy Mobile the necessary disclosure documents and entering a franchise agreement without proof Hoy had received independent advice on the contract.
More serious, however, was failure of Allphones to pay Hoy Mobile the commission and mobile payments it was entitled under the franchising agreement.
After piecing together the details of Allphones arrangement with Hoy Mobile – although both agreed they had signed a franchise agreement, neither retained a copy – Justice Rares ruled that Allphones had failed to pass on around $75,000 in commission and bonus payments Hoy Mobile had earned by signing customers up to mobile phone contracts.
Logo from Allphones.
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