$200,000 fine for ex-managing director of franchisor
The ACCC prosecuted Jurlique International Pty Limited for resale price maintenance. The penalties totalled $3.4m against four companies in the Jurlique group and $200,000 against Dr Jurgan Klein, the former managing director. Dr Klein has the dubious distinction of being involved in a record penalty for resale price maintenance.
Why did the ACCC prosecute?
Jurlique threatened that it would stop supply of products to franchisees unless the franchisees agreed to maintain prices above a minimum price.
Lesson for franchisors
What is especially relevant for franchisors is that in determining the penalty, the Judge took into account Jurlique’s market power in relation to its franchised stores. He said that a threat to stop supply of product to a franchised store would effectively ruin the franchisee’s business. Franchisors who are in this position can expect extremely hefty fines if they breach the resale price maintenance provisions of the Trade Practices Act.
Thomson Playford Cutlers works with franchisors as a strategic partner to improve overall network performance. We manage compliance issues and address the legal considerations that contribute to franchise network efficiency, profitability and expansion.
18.02.2008
FCA Member
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