The Federal Court has declared that Megasave Couriers Australia Pty Ltd (Megasave) breached the Australian Consumer Law by making false or misleading representations to prospective franchisees, in proceedings brought by the ACCC.
Megasave’s sole director Gary Bourne admitted that he was knowingly concerned in the conduct.
Megasave admitted that from, at least September 2019 to July 2020, it made false or misleading representations to prospective franchisees that they would receive guaranteed minimum weekly payments (typically $2,000 per week) and a guaranteed annual income (usually $91,000) if they purchased a Megasave courier franchise.
The representations were made in promotional statements and marketing material on Megasave’s website and in online advertisements, as well as in documents and communications provided to prospective franchisees.
However, during this time Megasave was not paying existing franchisees the promised minimum weekly payments, and did not have sufficient revenue to pay existing or potential franchisees in accordance with the representations it was making.
Megasave admitted that there was no reasonable basis for making the representations.
“We received many complaints from Megasave franchisees who had relied on these representations when making a decision to pay many thousands of dollars for a franchise, believing that buying a Megasave franchise would provide them with a secure future income,” ACCC Deputy Chair Mick Keogh said.
“Many of the affected franchisees experienced significant financial hardship and emotional distress due to Megasave’s failure to make the guaranteed payments that it promised.”
“The ACCC is continuing its important work in the franchising sector, taking action where franchisees are being treated unfairly.”
By consent, the Court made an order disqualifying Mr Bourne from managing corporations for a period of five years.
“There are significant consequences for company executives and officers who are knowingly concerned in breaches of the Australian Consumer Law,” Mr Keogh said.
Megasave and Mr Bourne admitted liability, and consented to the orders made by the Court.
A hearing to determine the penalties and compensation for affected franchisees will be held on 29 April 2021.
Megasave is a franchised Australia-wide courier delivery business.
In July 2020, the ACCC instituted proceedings against Megasave and its sole director Gary Bourne.
On 19 June 2020, the ACCC obtained a Federal Court order freezing the assets of Megasave, Mr Bourne and other entities controlled by him. These orders were later replaced by an undertaking to the Court by Mr Bourne in broadly similar terms, which remains in place until revoked by the Court.
Megasave advertised its franchises via the Megasave website, Seek Business website and Franchise Business website. The franchises have been advertised at different prices over time, ranging between $12,000 and $30,000. However, franchises were most commonly sold for approximately $27,500 (incl. GST) each.