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Update on Franchise Non-compliance Enforcement Activity: Cash Converters, Mobile Travel Agents and RAMS franchise systems

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Update on Franchise Non-compliance Enforcement Activity: Cash Converters, Mobile Travel Agents and RAMS franchise systems

The ACCC has issued penalties to Cash Converters and Mobile Travel Agents for breaching the Franchising Code of Conduct by failing to update required information on the Franchise Disclosure Register.

Post the ASIC civil penalty proceedings against RAMS Financial Group over alleged systemic misconduct in its home loan operations a class action by former franchisees is now seeking to intervene in the ASIC matter, citing overlapping factual issues and concerns over reliance on Westpac’s internal findings.  #franchising #disclosure #franchisor_liability

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Licenced to operate: What the ASIC v RAMS litigation offers about licence models applying to franchise systems

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Licenced to operate: What the ASIC v RAMS litigation offers about licence models applying to franchise systems

The Schaper report in December 2023 recommended further evaluation of the merits of replacing the Franchising Code of Conduct with a licensing regime. This recommendation arose after a submission to the review by the Australian Competition and Consumer Commission. Without detail of what a licensing regime may look like there is uncertainty about what any licensing regime may require. The recent case of ASIC v RAMS however provides an illustration of the effect a licensing regime may have on a franchisors. Click here to read more.

#franchising #licensing #franchisor_liability

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Imprecise Contracts and Good Faith: Lessons from Beecham Motors Pty Ltd v General Motors Holden Australia NSC Pty Ltd

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Imprecise Contracts and Good Faith: Lessons from Beecham Motors Pty Ltd v General Motors Holden Australia NSC Pty Ltd

The language used in a contract can significantly impact its enforceability. Reliance on the incorporation of an obligation to act in good faith will not necessarily result in an outcome sought. This was considered in the recent Supreme Court decision in Beecham Motors Pty Ltd v General Motors Holden Australia NSC Pty Ltd, which provides guidance for those with or considering a franchise agreement and the drafters of franchise agreements. #franchise_agreements #good_faith #franchisee_group_action

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Statutory Demands with Offsetting Claims and the Building and Construction Industry Security of Payment Act 2002 (Vic) : Can you Mix the Two?

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Statutory Demands with Offsetting Claims and the Building and Construction Industry Security of Payment Act 2002 (Vic) : Can you Mix the Two?

On 6 March 2025, Associate Justice Barrett handed down his decision in the matter of Duke Ventures Wellington Street Pty Ltd [2025] VSC 75. In this case, the Court clarified when a debtor can rely on an offsetting claim to set aside a statutory demand in a dispute adjudicated under the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOPA).

#insolvency #statuory_demand  #creditors #securityforpayments

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Court authorises priority payment to funder of liquidator action recovering money for creditors

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Court authorises priority payment to funder of liquidator action recovering money for creditors

The matter of Ford Kinter & Associates Pty Ltd v Reliance Franchise Partners Pty Ltd (in liq) [2025] FCA 139 emphasises the important role that creditors can play in facilitating asset recovery during insolvency proceedings. It further examines the broad discretionary powers the courts have under section 564 of the Corporations Act 2001 (Cth) (the Act), which enables courts to reward creditors who take on the financial risks of litigation to be prioritised when recovering company property or expenses in a winding up due to the risk assumed by them. In doing so, the court considers the public interest in encouraging creditors to provide indemnities so as to enable assets to be recovered.

#insolvency #liquidation #creditors #publicinterest

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Franchisor Obligations for Communication with Franchisees: Lessons from Sec New Line Pty Ltd v Muffin Break Pty Ltd

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Franchisor Obligations for Communication with Franchisees: Lessons from Sec New Line Pty Ltd v Muffin Break Pty Ltd

Withholding information whilst negotiating agreements can amount to misleading and deceptive conduct. However, the recent Supreme Court decision in Sec New Line Pty Ltd v Muffin Break Pty Ltd provides important guidance on when silence will become deceptive, specifically in the context of lease and franchising renewals.

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ASIC -v- PayPal: How it assists understanding what constitutes an Unfair Contract Term

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ASIC -v- PayPal: How it assists understanding what constitutes an Unfair Contract Term

The Federal Court decision of ASIC v PayPal Australia Pty Limited [2024] FCA 762 further clarifies the statutory unfair contract terms regime with respect to standard form contracts and provides another example of ASIC successfully taking action to void an unfair contract term.

Businesses using standard form contracts should review their contracts for potentially unfair contract terms considering recent legislative and common law changes.

#unfaircontractterms #unfair #contract #standardform #ASIC

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Unfair Contract Terms What we can learn from the decided cases

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Unfair Contract Terms What we can learn from the decided cases

This paper tracks the legislative development of the unfair contract terms regime, recaps the basic elements and exemptions to the regime’s application and then recounts the historic development of the case law in respect of the regime.

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Pursuing directors for insolvent trading: Can a creditor take action?

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Pursuing directors for insolvent trading: Can a creditor take action?

In certain circumstances creditors can take direct action against directors of companies in liquidation  to recover insolvent trading losses suffered.

The process for doing so is to first try and obtain the liquidator’s consent and if they are not forthcoming, then take the steps required under subsections 588S and 588T of the Act.

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Contempt of Court – Lessons from Ultratune’s $1.5 million fine for contempt

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Contempt of Court – Lessons from Ultratune’s $1.5 million fine for contempt

In an previous article discussing the ACCC’s enforcement priorities for 2024-25, we noted that the Australian Competition and Consumer Commission (ACCC) has continued to monitor strict compliance with small business codes of conduct, including the Franchising Code of Conduct (Franchising Code).

 

In particular, the ACCC had pursued UltraTune, for contempt of Court when Ultratune failed to comply with orders made by the court requiring Ultratune to take specific actions. On 28 January 2025, UltraTune’s appeal was dismissed by the Full Federal Court.

 

UltraTune’s story serves as an important reminder to ensure active monitoring of business’ compliance with all the obligations including those imposed on them by the law or court order and those that they might voluntarily agree to undertake.

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Admitting debts to qualify creditors for interest: requirements on liquidators under section 563B of the Corporations Act.

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Admitting debts to qualify creditors for interest: requirements on liquidators under section 563B of the Corporations Act.

In the decision of Park, Re Queensland Nickel Pty Ltd (in liq) (Statutory Interest)[1], Justice Downes held that liquidators must make a ‘conscious’ effort to determine who may be entitled to a company’s assets for debts to qualify for interest under section 563B of the Corporations Act 2001(Cth) (Act). [1] [2024] FCA 1300

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Navigating a Restructure Under the Corporations Act: Protection Against Contractual Rights to Help Your Business Get Back on Track

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Navigating a Restructure Under the Corporations Act: Protection Against Contractual Rights to Help Your Business Get Back on Track

If your business is restructuring, contractual rights triggered solely by the restructure or financial distress may be rendered unenforceable under section 454N of the Corporations Act 2001 (Cth). This statutory protection can help a business stabilise and continue trading through difficult times. This article reviews a recent case of Okami SA Newton Pty Ltd v Newton SC Pty Ltd which considered the operation of this section.

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Unequivocally exposed: Lessons learned from ASIC’s greenwashing case against Active Super

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Unequivocally exposed: Lessons learned from ASIC’s greenwashing case against Active Super

Active Super was found to have made false or misleading representations by using unequivocal language, and engaged in conduct liable to mislead the public in relation to investments it made.

The case provides further insights into the latest developments on ASIC’s ongoing greenwashing enforcement action.

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New ASIC Guidance on Insolvent Trading

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New ASIC Guidance on Insolvent Trading

On 6 December 2024, the Australian Securities & Investments Commission (ASIC) updated its Regulatory Guide: Duty to prevent insolvent trading: Guide for directors (RG 217).

The guide contains key principles intended to help directors comply with their duty to prevent insolvent trading and how to establish safe harbour protection through proactive monitoring and timely action.

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Franchising Update: A Year in Review

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Franchising Update: A Year in Review

This article will looks back on some of the key developments that occurred in the franchising sector in 2024, offering a reminder of changes and developments that occurred and foreshadowing what franchise businesses can expect in this coming year.

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Green Screens: Vanguard’s Greenwashing Leads to $12.9 Million in Penalties

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Green Screens: Vanguard’s Greenwashing Leads to $12.9 Million in Penalties

Last year, the Federal Court of Australia handed down its decision in Australian Securities Investment Commission v Vanguard [2024] FCA 308. This case serves as a reminder that business who are making sustainable investment claims must ensure that those claims are not misleading or deceptive in nature.

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From Green to Red: Lessons learned from ASIC’s landmark $11.3 million penalty imposed on Mercer Superannuation (Australia) Ltd

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From Green to Red: Lessons learned from ASIC’s landmark $11.3 million penalty imposed on Mercer Superannuation (Australia) Ltd

In ASIC’s first case against alleged greenwashing conduct, the court has ordered that Mercer Superannuation (Australia) Ltd pay a landmark $11.3 million penalty after it made misleading statements about sustainable and environmentally-friendly superannuation investment options marketed to its members.

Read on for key details of the case, and a breakdown of what your business can do to avoid greenwashing.

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Sladen Snippet - Proposed General and Specific Prohibitions On Unfair Trading Practices – Chance To Submit Your Views

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Sladen Snippet - Proposed General and Specific Prohibitions On Unfair Trading Practices – Chance To Submit Your Views

On 15 November 2024, the Treasury release a consultation paper on the design of proposed general and specific prohibitions on unfair trading practices. Options to amend the Australian Consumer Law will be considered and agreed in consultation with States and Territories.

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Senior Management liability for the conduct of a company business: Lessons from Productivity Partners Pty Ltd v ACCC

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Senior Management liability for the conduct of a company business: Lessons from Productivity Partners Pty Ltd v ACCC

The High Court deemed a tertiary college’s enrolment processes to be unconscionable for creating a risk of unsuitable student enrolment and found that  senior management may be held liable as accessories for the actions of the business if they were aware of the primary matters which made the conduct unreasonable.