FR.MARAPR13.PG122.pdf
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Consumer rights and franchisee obligations
R marianne marchesi lawyer in mason sier Turnbull’s Corporate advisory & Franchising team
ecent action by the Australian Competition and Consumer Commission (ACCC) is a stark reminder that franchisees, particularly those operating in a retail context, cannot afford to be complacent about their obligations under consumer law. The ACCC has instituted proceedings in the Federal Court against 11 Harvey Norman franchisees for misleading and deceptive conduct. It claims that the franchisees misled consumers about their rights under the consumer guarantee provisions of the Australian Consumer Law (ACL). The ACCC alleges that the franchisees made certain representations to customers, including that: • the franchisee was under no obligation to provide remedies for damaged goods unless notified within a specific period of time; • the franchisee was not obliged to provide remedies for goods still covered by the manufacturer’s warranty; • the franchisee had no obligation to provide refunds or replacements for particular items such as large appliances or items priced below a certain amount; and • the consumer must pay a fee for the repair and return of faulty products.
Guarantees
The ACL sets out nine consumer guarantees which apply to goods. They are, in summary: 1. that goods are of acceptable quality; 2. that goods will be reasonably fit for any purpose the consumer or supplier specified;
Franchisees must educate their employees, who often enjoy face-to-face contact with consumers, on the rights of consumers and consumer guarantees 3. that the description of goods (for example, in a catalogue or television commercial) is accurate; 4. that goods will match any sample or demonstration model and any description provided; 5. that the goods will satisfy any extra promises made about them (express warranties); 6. that the supplier has the right to sell the goods (clear title), unless the supplier alerted the consumer before the sale that they had ‘limited title’; 7. that the supplier has undisturbed possession of the goods; 122| FRaNCHIsINg maR/apR 2013
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8. that goods are free of any hidden securities or charges; and 9. manufacturers or importers guarantee they will take reasonable steps to provide spare parts and repair facilities for a reasonable time after purchase.
Customer rights
Where a product develops a minor fault, the supplier can choose between repairing the goods, offering the consumer a replacement, or providing a refund. In cases of a product developing a major fault, the consumer has a right to choose whether to recieve a refund or a replacement item, or may ask for compensation for any drop in value of the goods. In early 2012, the ACCC embarked on a national consumer guarantee awareness raising campaign - “If it’s not right, use your rights. Repair, replace, refund.” Rod Sims, chairman of the ACCC, stated then that “Consumer Guarantees [have] been identified as a national priority by ACL Regulators and is a matter of particular concern for the ACCC with more than 16,000 contacts from members of the public to the ACCC’s Infocentre so far this year.” The ACCC has stated that it is conducting a number of investigations into other large manufacturers and retailers regarding breach of consumer guarantees. Franchisees should ensure they are aware of their obligations under consumer law and seek advice if necessary. The ACCC and other consumer groups make information readily available to the public in relation to consumer law.
Spread the word
In turn, franchisees must educate their employees, who often enjoy face-to-face contact with consumers, on the rights of consumers and consumer guarantees. It is essential for all staff members to understand these issues. Training manuals, brochures and posters can disseminate this information easily and effectively. The ACCC has developed a training video, as well as other material, for this purpose. Franchisees should also check their receipts and refunds policies to ensure they are compliant with the Australian Consumer Law, even if these have been prepared by the franchisor. F