ACCC alleges Megasave Couriers misled franchisees with "guaranteed payments".
On July 3rd, the Australian Competition and Consumer Commission made public a Notice of Filing, detailing the actions taken by the ACCC in the Federal Court against the franchisor Megasave Couriers Australia Pty Ltd, including sole director Mr Gary Bourne, for multiple alleged breaches of Australian Consumer Law (ACL). The alleged misconduct relates to the deceiving of prospective and existing franchisees with false promises of “guaranteed payments”, which were rarely, if ever, met.
The action follows the ACCC receiving over 30 complaints from Megasave franchisees. Some complaints stated that the terms in the “Operations Manual” (introduced by Megasave in December 2019) obliged franchisees to disclose “sales leads” on a weekly basis in order to remain eligible to receive $2000 per week, which were previously “guaranteed” by the Megasave Franchisee Earnings Document. This document further promised franchisees a guaranteed $91,000 annual income, following a six-month term paying $2,000 per week. Terms varied slightly between franchisees, but in virtually no cases were the promised payments made.
The ACCC alleges that text messages and conversations between Mr Bourne and his prospective Megasave franchisees affirm that he had personal knowledge of the misleading and deceptive conduct (which is prohibited in trade and commerce according to Section 18 of the ACL).
Two text message exchanges between Mr Bourne and prospective franchisees stated:
Prospective Franchisee: “What if we don’t get that [number] of parcels, do we get less pay?”
Bourne: “No, it’s a guaranteed income, and it doesn’t matter if you get 1 or 130 parcels a day.”
AND
Prospective Franchisee: “Just confirming first 26 weeks I’ll be getting $2000 regardless of how many deliveries I make after that it’s minimum guaranteed 91k per year with a chance of eventually going higher when I take on more deliveries? Which is roughly $1750 a week inc GST.”
Bourne: “Exactly.”
According to the ACCC’s findings, Megasave continued to advertise these conditions on its website, even after it failed to meet its contractual obligations with existing franchisees. The introduction of the aforementioned “weekly sales leads” condition may be unlawful, as it was not provided for in the Megasave Franchisee Earnings Document prior to signing.
The average price of a Megasave franchise was $27,500. Some franchisees have faced severe financial hardship in the absence of “guaranteed” weekly and annual payments over the last twelve months. As ACCC Deputy Chair Mick Keogh states: “Purchasing a franchise is a big investment, and potential franchisees must be able to rely on the information from the franchisor being accurate.”
On June 19th 2020, a Federal Court order froze the assets of Mr Bourne and Megasave, with legal proceedings currently underway. The ACCC aims to find redress for franchisees deceived by the conduct, administer penalties and disqualify Mr Bourne from managing corporations.
Franchise Legal has already advised several Megasave courier franchisees and is well-informed on the matter. We are glad to see the ACCC acting against alleged franchising misconduct. If you have purchased a Megasave franchise and aim to secure proper redress, contact Franchise Legal for a consultation.