FRANCHISING AND DIRECTORS' DUTIES:
Sometimes it may be too good to be true.
Part of selling any business is to talk about its good points,
how much income it makes and the benefits to any potential
purchaser. The problem comes when those benefits are oversold. With
selling a business as part of a franchise it is the same
as a recent article I published highlighted.
Under the new Franchising Code of Conduct, which commenced in
January 2015, Franchisors have new disclosure obligations and a
duty to act in good faith when dealing with Franchisees and
prospective Franchisees. In 2015, the ACCC is making it a priority
to crack down on breaches of the Franchising Code.
In a recent case in the Federal Court (you can
find all the details here) , in proceedings brought by the
ACCC, the Court found that South East Melbourne Cleaning Pty Ltd
(in liquidation) (formerly Coverall Cleaning Concepts South East
Melbourne Pty Ltd) as Franchisor had contravened both
