THE BIZOP NEWS

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We need better reporting about legal issues as they relate to franchises.  Here is a story from Australia, apparently about a Franchisor threatening its franchisees.

"ALLPHONES has been banned from telling franchisees they will be given preferential treatment if they enter into a new agreement with the company.

The court ruling comes after a separate court decision last year, involving franchisee Hoy Mobile, that found Allphones had acted with "calculated dishonesty" and "continuing deceit" by withholding commission payments."

As a consumer would you want to continue to do business with Allphones, or any of its franchisees, if they had acted with "calculated dishonesty"?  Hell, no.

And now Allphones is "banned from threatening its franchisees"?

But the real legal story is more nuanced.

From the ACCC's website, we learn more about the Allphones case.

"The Federal Court of Australia has ordered interim injunctions restraining Allphones from representing that it will give preferential treatment to franchisees who have signed new agreements and/or a deed of release in favour of Allphones, until the final hearing of Australian Competition and Consumer Commission's allegations. 

The Federal Court has also ordered an interim injunction restraining Allphones from taking such factors into account in making allocations of stock to its franchisees.

On 31 October 2008* the ACCC applied to the Federal Court of Australia in proceedings number NSD 1567 of 2008 seeking urgent interim injunctions restraining Allphones from giving effect to a stock allocation policy as set out in an email sent by its CFO, Mr Tony Baker, to franchisees on 20 October 2008. 

Mr Baker's email stated that once a minimum level of stock was assigned Allphones would preferentially assign further stock to franchisees on what are known as "New Franchise Agreements", those franchisees who have signed a deed of release and Allphones owned stores. 

In his email, Mr Baker set out various reasons as to why Allphones considered this new policy was necessary. 

The ACCC alleged that those reasons were facetious and the real reason for the threatened stock allocation policy was to force franchisees to sign a new agreement or a deed releasing Allphones from damages claims. 

The email was sent one day before Allphones was due to commence negotiations with certain franchisees where it was seeking a resolution which included those franchisees signing a New Franchise Agreement and a deed of settlement and release."

There is no finding of fact that Allphones threatened its franchisees.  There is however a temporary freeze on Allphone trying to convert its old franchisees to a new franchise agreement buy linking the issue to how much merchandise Allphone will provide the franchisee.

When the trial is heard, Allphones may be found gulity of deception and unfairness, but that has not happened yet.