The Australian Competition and Consumer Commisson's (
ACCC's) investigations into the failed Australian venture of fast food retailer Quizno's recently concluded when master franchisee Quizno's Australia Pty Ltd's (Quizno’s Australia) gave an undertaking to the ACCC to pay each former sub‑franchisee a full refund of the standard franchise fee.
The ACCC alleged that Quizno's Australia made various misrepresentations to potential sub‑franchisees, in breach of section 52 of the Trade Practices Act 1974 (TPA), including representations that the Quizno's franchise system was a proven operating system which had been trialled and tested in Australia for two years and representations regarding expected levels of turnover, labour, food and capital costs. In actual fact, the franchising system had not been trialled and had no proven track record in Australia and the financial predictions were unlikely to be achievable.
While Quizno’s Australia made no admission of liability and the compensation falls well short of the actual losses suffered by many Australian franchisees, the ACCC is claiming a victory in its ongoing battle against misleading and deceptive conduct.
The matter serves to remind franchisors of the caution required in ensuring the accuracy of any promotional materials provided to potential franchisees in order to comply with section 52 of the TPA.
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