ACCC Launches Unconscionable Conduct Action Against Franchisor

Smart Company:

The Australian Competition and Consumer Commission has launched legal action against franchisor Seal-A-Fridge and its director Nigel Rooney, alleging the company engaged in unconscionable conduct towards its franchisees.

Seal-A-Fridge, which is the franchisor of a mobile refrigeration seal replacement business, operates franchises throughout Australia.

The ACCC claims Seal-A-Fridge engaged in unconscionable conduct under section 51AC of the Trade Practices Act by:

• Unreasonably withholding consent to the transfer of franchises.
• Unilaterally increasing the fees associated with the national Seal-A-Fridge telephone number contrary to franchise agreements.
• Disconnecting franchisees from the national Seal-A-Fridge telephone number to force franchisees to agree to the increased fees.

The ACCC also alleges Seal-A-Fridge contravened the Franchising Code of Conduct and therefore section 51AD of the act by failing to provide adequate disclosure to franchisees before they entered into franchise agreements. “It is alleged that Seal-A-Fridge later failed to provide current disclosure documents to franchisees after receiving written requests,” the competition watchdog said in a statement.