Allphones is a owner and franchisor of a network of retail stores selling telecommunications products. Disagreement between Allphones and a franchisee - involving the Trade Practices (Industry Code – Franchising) Regulations 1998 and the Trade Practices Act 1974 (Cth) - was reflected in Australian Competition and Consumer Commission v Allphones Retail Pty Limited (No 4) [2011] FCA 338. In October 2008 Allphones gave undertakings to the Federal Court not to withhold consent to assignment of its franchises on a certain basis. regrettably, the undertakings were not effected.
Allphones has been held to have breached the undertakings in June 2009 by withholding consent to one of its franchisees assigning the franchise agreement on the basis that -
• the franchisee had not released Allphones from liabilities regarding a Notice of Dispute andAllphones also did not give seven days notice in writing of its intention to withhold consent to assigning the franchise agreement.
• the assignee must enter into a form of franchise agreement with Allphones that is different to the initial franchise agreement
Neither the Australian Competition & Consumer Commission nor the Court were impressed.
Allphones acknowledged that its conduct was both wrongful and culpable, and apologised to the Court and franchisees. Potential franchisees might take note.
