Domino’s pays fines for breaching franchise code

dominos-cheltenhamPizza chain, Domino’s, has been penalised $18,000 by the consumer watchdog for failing to comply with the franchising code of conduct. 

The Australian Competition and Consumer Commission (ACCC) said it issued the infringement notices because it believed that Domino’s failed to comply with the requirement in the franchising code of conduct to provide franchisees with both an annual marketing fund financial statement and an auditor’s report within the time limits prescribed under the Code.

The penalty for breaches is fixed at $9000 and Domino’s was issued with two infringement notices. 

“These are the first penalties for non-compliance with the franchising code,” said Dr Michael Schaper, ACCC deputy chair.

Schaper said marketing fund contributions are often a significant expense and franchisors need to provide timely and accurate disclosure of the fund’s activities.

“Ensuring small businesses receive the protection of industry codes is an enforcement priority for the ACCC,” he said.

If franchisees are required to contribute to a marketing fund, the code requires a franchisor to prepare an annual financial statement to franchisees, disclosing the fund’s receipts and expenses, and to give a copy of the financial statement to franchisees by no later than four months after the end of the financial year.

The code also requires the fund to be audited (unless 75 per cent of franchisees agree the franchisor does not have to comply with this requirement) and for the auditor’s report to be provided to franchisees within 30 days of the report being prepared.

According to the ACCC, Domino’s confirmed it had provided the 2015-16 marketing fund financial statement and auditor’s report to its franchisees in late February 2017, which for both documents was outside the timeframes prescribed by the code.

The ACCC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain requirements of the Franchising Code. The payment of a penalty specified in an infringement notice is not an admission of a contravention of the Code.

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