The ACCC has accepted a court enforceable undertaking from Husqvarna Australia Pty Ltd after the outdoor power products subsidiary admitted it likely misled its franchisees when it stated that the Franchising Code of Conduct (FCC) did not apply to their contracts.
The ACCC took action over concerns Husqvarna’s “dealership agreements” may have contravened provisions of the FCC, and consequently section 51ACB of the Competition and Consumer Act (CCA), and made misleading representations in breach of the Australian Consumer Law (ACL).
“Husqvarna told its dealers that their dealership agreements were not franchising agreements. Husqvarna has acknowledged that this was likely to be misleading and in breach of the Australian Consumer Law,” ACCC Deputy Chair Mick Keogh said.
“If an agreement meets the definition of a franchise agreement it will be covered by the Code regardless of whether it’s referred to as a ‘franchise agreement’ or not.”
“By claiming that the dealership agreements were not franchising agreements, Husqvarna likely gave dealers the impression that they were not entitled to protections under the Franchising Code."
Husqvarna also acknowledged that it is likely to have terminated one or more dealers in breach of the Franchising Code and in consequence also in breach of section 51ACB of the CCA.
“Franchisors should take care not to misrepresent franchisees’ rights and should ensure their franchise agreements are compliant with the Franchising Code of Conduct. Ensuring small businesses receive protections under this Code as well as other industry codes is a current ACCC enforcement and compliance priority and we will continue to take enforcement action where appropriate,” Mr Keogh said.
“This ACCC action will ensure that Husqvarna’s dealers receive the protections they are entitled to under the Franchising Code of Conduct.”
The ACCC was also concerned that the dealership agreements contained unfair contract terms, in breach of the business-to-business unfair contract terms law which came into effect in November 2016.
Husqvarna has acknowledged that these agreements were likely to be standard form agreements that contained a number of unfair contract terms, which were void and unenforceable.
Husqvarna cooperated with the ACCC’s investigation and has rewritten its dealership agreements to comply with the FCC and the CCA. It has also undertaken not to enforce the terms in its existing agreements which the ACCC considered were likely to be unfair contract terms.
