BAKERS DELIGHT CLEARED BY ACCC
After an extensive investigation by the ACCC in Australia, Bakers Delight has been cleared of an unconscionable conduct in relation to its franchise operations. The claims had been made in relation to the treatment of former franchisees
Bakers Delight has been cleared by the Australian Competition and Consumer Commission of allegations relating to complaints by a number of disgruntled former franchisees. The allegations were highlighted by Australian Federal Member of Parliament Ms Joanna Gash, in March 2007.The decision by the ACCC was made after "an in-depth investigation" spanning 12 months. Bakers Delight was cleared of any wrongdoing, the outcome of the investigation showing no evidence to support the allegations. Bakers Delight produced voluminous information and documents to the ACCC and took a very proactive role in dealing with the issues of concern raised.
The ACCC announced on 22 April 2008 that it had decided to take no further action in the matter, having found:
- No evidence that Bakers Delight had engaged in unconscionable conduct or any breach of the Franchising Code of Conduct;
- No evidence of any widespread or systematic problem of compliance within the Bakers Delight franchise system;
- No evidence of 'churning' within the Bakers Delight system.
Iin fact, the report went so far as to say that the company is generally reluctant to initiate termination and does not have a record of repeatedly selling franchise sites. 'It should not be assumed that where there is smoke there is always fire,' said ACCC chairman, Graeme Samuel.
'You always take an ACCC investigation seriously, even when you think you have not crossed any boundaries,' said Murray Deakin of lawyers Middletons, who represented Bakers Delight. 'When you add in the complexity of the Franchise Code it becomes a very big deal for a company. In Bakers Delight's case, we were able to work with the client to prove to the ACCC that none of the substantive allegations were in fact true.'
The ACCC looked at a number of claims by disgruntled former franchise holders and investigated allegations of churning and collusion with banks. 'Bakers Delight has been dragged through the mud in this case and it has attracted plenty of media attention ,' Middleton's partner Chris Nikou explained. 'In the end, when a franchise is terminated for whatever reason, there is always a chance that someone will be upset. Bakers Delight is a quality business with best practice processes and documentation around its franchise system, and it was this in the end that held it in good stead in this investigation.'
The ACCC in the end endorsed some Bakers Delight's practices, stating in its media release that ‘the evidence supports the view that Bakers Delight is generally reluctant to initiate termination and does not have a record of repeatedly selling franchise sites.
Middletons says the investigation has highlighted the paramount importance of Australian franchisors having in place:
- first class systems and procedures to manage and support a network of franchisees
- franchise agreements,disclosure documents and associated agreements which strictly comply with the latest Franchising Code of Conduct requirements
- ongoing access to specialist franchising and trade practices law expertise and experience
- continuous communications with franchisees, particularly in relation to the expression of any concerns by franchisees
- an open and positive dialogue with the regulator
Commenting on the decision, Richard Taylor, Bakers Delight Company Secretary, said, 'It's in our best interest to work with and support our franchisees, it's pivotal to the success of the entire network.' The company has not grown to what it is today without a strong network of franchises, their success is our success.
Over the past 28 years Bakers Delight has grown to become the world's most successful
retail bakery chain with 700 bakeries and 500 franchisees, employing 15,000 people, serving
2.5 million customers each week across four countries.
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