In 2024 the first case of franchisors being held accountable for the conduct of their franchisees resulted in a whopping $1.44m fine for the 85 Degrees Coffee bakery chain.
The court found a “systematic failure to ensure compliance within its franchise network”.
Not only was the fine the third highest secured by the Fair Work Ombudsman it was the first instance of the FWO using the responsible franchisor entity provisions of Protecting Vulnerable Workers reforms.
Young workers and visa holders employed at eight 85 Degrees outlets in 2019 were underpaid a total of $32,321.
The court found that while 85 Degrees did not directly underpay the workers, it is legally liable for the franchisees’ actions. The court found it should reasonably have known, and from 1 April 2019 did know, its franchisees would commit underpayment, record-keeping and pay slip contraventions, and failed to take reasonable preventive steps.
Chatime fined for underpayment
Underpaying staff also proved a problem for the Australian franchisor of the Chatime bubble tea chain, and its managing director.
Penalties amounted to a total of $132,840 for underpayments of more than $160,000.
The franchisor was hit with a $120,960 penalty while managing director Chen ‘Charlley’ Zhao was fined $11,880 penalty.
The court found he was involved in the underpayment of casual loadings and weekend penalty rates.
Workers were underpaid at 10 Chatime outlets across Sydney in Bondi Junction, Chatswood, Wetherill Park and the CBD. Nine Chatime outlets across Melbourne, in Dandenong, Doncaster, Glen Waverley, Cheltenham and the CBD also underpaid staff.
Waste disposal costs KFC, Hungry Jacks, McDonald’s
Three major fast food brands were fined for breaching for waste disposal rules. The Environmental Protection Agency Victoria fined KFC, Hungry Jacks and McDonald’s for the actions of some staff at Melbourne outlets who failed to dispose of cooking oils and waste liquids in collection tanks.
Why Pizza Hut and Harvey Norman hit the headlines
Big franchise brands hit the headlines too for their engagement with consumers.
Pizza Pan Group, trading as Pizza Hut Australia, was hit with a $2.5m for sending more than 10 million spam messages within four months in 2023.
The company sent more than 5.9 million texts and emails to customers who either had not consented or had withdrawn their consent to receive marketing. It also failed to include an unsubscribe option to customers in more than 4.3 million messages.
Aside from the fine, the company was required to appoint an independent consultant to review its compliance over a three year period.
Harvey Norman, along with Latitude Finance Australia, was in trouble for making false and misleading financial claims in a national advertising campaign.
The campaign, which ran from January 2020 to August 2021, was for a 60-month interest-free and no-deposit payment method. Customers were required to take out a credit card, such as the Latitude Go Mastercard, to purchase goods.
However, the Australian Securities and Investments Commission (ASIC), believed many consumers may have been unaware of the financial arrangements they entered when buying products at Harvey Norman stores.
Optus, United Petroleum, Domino’s facing court
There are a number of brands and individuals facing court action in 2025 including Optus for alleged inappropriate sales tactics; a former United Petroleum operator accused of providing an Fair Work Inspector with falsified records; and Domino’s, which has been served with a shareholder class action.
Check out what else made news this year here.
