A franchise business now in liquidation has been ordered to pay a $3.55m penalty for misleading and deceptive conduct, and making false representations.
The Federal Court order against SensaSlima Australia Pty Ltd follows a ruling in 2014 which found the business made false representations in its franchise disclosure document about Peter Foster’s involvement in the franchise system.
Foster, was ordered to pay $660,000, the maximum penalty for each of the contraventions found by the court for being knowingly concerned or a party to some of the conduct.
Australian Competition and Consumer Commission deputy chair Dr Michael Schaper said “Mr Foster went to great lengths to hide his involvement in SensaSlim from franchisees and others – his conduct was unacceptable and extremely deceitful, and the Court imposed penalties reflect this.
“People who decide to buy into a franchise business typically put much of their own savings on the line. They must be able to make informed business decisions on the basis of full and accurate disclosure by the franchisor,” Dr Schaper said.
In his judgment, Justice Yates noted that Foster “preys on the right-mindedness of others to cheat and deceive. In the present case, he lurked behind SensaSlim precisely for that purpose. He is beyond redemption.” Justice Yates further noted that “…the protection of the public is paramount”.
The Court also found that SensaSlim made false representations about the role of SensaSlim’s officers, Michael Boyle and Peter O’Brien, that there was a ‘worldwide clinical trial’ of the SensaSlim Solution and the earning potential of SensaSlim franchises.
The Court has banned Foster for life from being involved with businesses promoting or supplying weight loss products or services, or being involved in any franchising business where his identity and involvement has not been disclosed in writing to prospective franchisees.
The Court also permanently disqualified Foster from managing corporations.
In addition, Peter Foster, Michael Boyle and Peter O’Brien were found to be knowingly concerned in, or party to, some of SensaSlim’s contraventions.
The Federal Court made orders that:
- Michael Boyle pay a penalty of $75,000 and be disqualified from managing a corporation for three years.
- Peter O’Brien pay a penalty of $55,000 and be disqualified from managing a corporation for 10 years