The law firm behind a class action against 7-Eleven has had its knuckles rapped by the Federal Court of Australia for making misleading statements to franchisees.
In December 2017 the law firm Levitt Robinson told franchisees they had to sign a non-negotiable litigation funding agreement as a pre-condition to participating in the class action. A letter stated to franchisees ‘if you are not happy to sign up to the Funding Agreement you will not receive any benefit from the class action.’
A correction notice published on the lawyers’ website pointed out another two errors sent out in bulletins to franchisees:
‘Indeed, if we do not proceed with the Class Action, it is very likely that your working conditions will become a lot worse and like with Caltex, which on 27 February 2018 announced that it is closing down its entire franchising operation, you will finish up a lot worse off.’
The lawyers also stated it was ‘our ‘best guess’ that each store may be entitled to damages to over $200,000 per annum for each franchise store.’
The Federal Court ordered Levitt Robinson to retract each of these misleading statements and give franchisees who had relied on these statements the opportunity to withdraw from the funding agreement.
The deadline for this action is 8 June 2018.
However, partner Stewart Levitt said there had been no mass withdrawal of franchisees from the class action.
He told Inside Franchise Business, “nobody pulled out as far as we’re aware, in fact there’s been an increase of about 20 per cent since it was posted.”
Levitt said the statements made about funding terms were outdated and should have been taken down but “events overtook us”.
In regards to the Caltex damages claim, he said “I think you’ll probably find most franchisees agree with us whether or not the advocacy was persuasive on the day. The overwhelming sentiment is in line with the views expressed.”
In response to the Court’s action, convenience chain 7-Eleven said in a statement, “The Federal Court of Australia ordered Levitt Robinson to retract statements it made in a number of bulletins to our franchisees encouraging them to sign a class action funding agreement, as there was no reasonable basis upon which to make the statements and they were misleading.
“These misleading statements included a ‘best guess’ damages figure each store may be entitled to, and that if the class action does not proceed franchisees will finish up a lot worse off.
“We welcome the retraction of these misleading statements.”
Levitt has since turned his attentions to the ANZ bank, which is also named in the class action.
“I wrote to ANZ Bank on behalf of franchisees who have ANZ loans to ask to meet to implement hardship proceedings.”
He said franchisees were at risk of default and sought the banker’s recognition of its obligations under the Code of Banking Practice.
At the time, Levitt said he had received no communication from the bank.
ANZ was contacted for comment.
