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At the very heart of franchising is the provision of goods and services. In providing such goods and services, there are a number of ways on a number of forums on which those goods will be promoted or information supplied to the end consumer; think labels, manuals, adds, Facebook posts, all of these play a part in the supply of information about the product. Further, there is no requirement such misleading conduct be intentional on the part of the advertiser in advertising, and thus obtaining a number of views on the interpretation of any particular add or promotion (including the all-important legal view) is essential. Whether you’re a producer, wholesale supplier (including franchisors) or end user supplier (including franchisees) you have legal obligations on what can and cannot be presented in such information.

Misleading Advertising

The ACCC is the body tasked with ensuring the accuracy of advertising, and spreading the word that it is illegal for a business to make statements that are incorrect or likely to create a false impression. This includes advertisements or statements in any media (print, radio, television, social media and online) or on product packaging, and any statement made by a person representing your business

Recently, the ACCC has proven its willingness to seek prosecution of suppliers who don’t exactly tell the truth in such supply of information. For example:

  • An egg producer was recently fined $300,000 after an ACCC investigation which concluded it had falsely labelled eggs as free range. The federal court agreed with the ACCC, funding as a matter of fact not all chickens were free to roam.
  • Late last year, producer Uncle Toby’s also felt the wrath of the ACCC after it was found to have exaggerated the health benefits of a certain product, placing terms such as ‘protein superfood’ on labelling. When really, they were just oats.
  • In a case bought by the ACCC against Hertz this year, the rental company provided a court enforceable undertaking after it represented to some of its customers that the vehicle that they had hired was damaged during their rental period when in fact the damage was pre-existing.
  • In another example, one of the biggest franchisors in Australia, McDonalds, was forced to pull advertising its grilled chicken burger. Advertisements said the burgers were ‘grilled’ when, in reality, the party was baked, and only the final re-heat took place on the grill (at which time those black grill lines had already been put on the burger).
  • In 2012, Apple was fined 2.25M after it had claimed its iPad was 4G capable, when it was, in reality, only compatible with spectrums that were not available in Australia.

If you are providing information on products or services, it’s important you get it right. All such providers should be familiar with the misleading advertising provisions of the Australian Consumer Law and have current and enforceable terms and conditions. Further, it is prudent to get any new packaging or advertising campaigns checked off by a advertising lawyer.

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