Bubble tea franchisor Sharetea Australia has paid $39,600 in penalties for alleged breaches of the Franchising Code of Conduct.
The ACCC issued two infringement notices, alleging the bubble tea chain’s franchise agreement required franchisees to pay the franchisor’s costs when it settled franchisee disputes.
Sharetea agreed to amend its franchise agreements, addressing a number of ACCC concerns about compliance.
These issues included:
- if a franchisee exercised their right to end a franchise agreement within the 14-day cooling-off period, Sharetea’s franchise agreement may have allowed Sharetea to keep money for expenses that Sharetea did not incur;
- for long periods after the agreement ended, franchisees were not permitted to be involved in any similar business activities within wide-ranging geographic areas;
- Sharetea could charge high interest rates on overdue franchise fee payments.
ACCC deputy chair Mick Keogh said “We sought changes to some terms in Sharetea’s agreements with its franchisees, because we were concerned that they were unfair.
“This action by the ACCC shows that it is important for franchisors to understand, and comply with, their obligations under the Australian Consumer Law and the Franchising Code.”
Keogh reiterated, “Franchise agreements must not create significant imbalances between franchisors and franchisees.”
