Express Mobile Services and the ACCC
The Australian Competition and Consumer Commission has investigated Express Mobile Services over allegations of non-compliance and misleading representations to franchise buyers.
The mobile professional services franchise has multiple divisions across Australia, including pest control and test and tag electrical services. The ACCC was concerned its franchise agreements contained waivers of verbal or written representations and so did not meet the requirements of the governing regulations, the Franchising Code of Conduct.
The Commission also expressed concerns that franchise buyers were being misled by the information provided online and in brochures.
There were three specific representations investigated: that test and tag services are mandatory (but they are not always in Western Australia); that no specific qualitifcations are required by franchisees (not accurate for test and tag and pest control divisions); and the some franchisees would be provided with initial customers (the franchisor did not always have reasonable grounds for this advice).
Express Mobile Services has acknowledged the ACCC's concerns and has given a court enforceable undertaking for the following:
- For three years it will not make any representation about a franchise (the nature, value, benefits, value of) without prior independent legal or financial verification.
- It will inform each franchisee that it does not intend to enforce the waiver of respresentations clause and offer to remove this clause from the agreement. It will also advise franchisees of the ACCC's free online franchise education course.
- To remove any representations in advertising and on its website that indicate a supply of initial customers.
- It will establish and implement a Consumer Law Compliance Program, which will be maintained for three years.
In the franchise purchasing process, franchisors are required to ensure information given to potential franchisees is accurate.
What should franchise buyers do?
ACCC Commissioner Sarah Court said "Potential franchisees must be able to rely on the accuracy of disclosure documents and representations made by the franchisor when they are deciding whether to purchase a franchise.
"The ACCC strongly encourages anyone who is thinking about buying a franchise to talk to other franchisees in that system and to do their research, including discussing the franchise agreement with a lawyer and an accountant, before making such an important decision."
- You can also read: How to spot a franchise system that has 'got it together'.