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Ultra Tune subject to alleged contempt of court
Ultra Tune has come under fire from the Australian Competition and Consumer Commission (ACCC) for allegedly breaching court orders in relation to the Franchising Code of Conduct and for allegedly breaching a court-ordered compliance program.
Simon Levett
Ultra Tune is a car servicing franchisor with operations in every mainland state and territory and over 270 call centres across Australia.
In January 2019, the Federal Court imposed total pecuniary penalties of $2.60 million against Ultra Tune (reduced to $2.01 million on appeal) for its contravening conduct.
The penalties related to Ultra Tune in the context of the late production and dissemination (by over six months in some instances) of marketing fund statements and disclosure documents allegedly mandated by the Franchising Code and the treatment of a prospective franchisee, whom the court alleged that Ultra Tune had misled.
Ultra Tune allegedly did not prepare marketing fund statements and audit reports for the 2019 and 2020 financial years until well after the compulsory deadline. From 2019 to 2021, it was claimed by the ACCC that Ultra Tune allegedly failed to update its disclosure document on time and failed to prepare two marketing fund statements within the time frame required by the Franchising Code.
“We allege that Ultra Tune disregarded its obligations under the Franchising Code, which are designed to provide transparency to franchisees,” ACCC commissioner Liza Carver said.
“In particular, we allege that Ultra Tune repeatedly failed to prepare important documents for franchisees within the required timeframe, which meant they were denied the opportunity to see, in a timely manner, how their contributions to the marketing fund were being used by Ultra Tune.
“The alleged failure by Ultra Tune to update its disclosure document is also concerning, as this document is used to give prospective franchisees key information about the franchise system, and existing franchisees current information about the running of the franchise.”
Similarly, in March 2019, the ACCC ordered Ultra Tune to implement a compliance program to ensure that there were no further breaches of the Franchising Code or the ACL. This compliance program required an Ultra Tune compliance officer to provide quarterly reports on the continuing effectiveness of its compliance program to the company.
The ACCC alleges that for the three quarters between April and December 2021, Ultra Tune failed to ensure that a compliance officer provided those reports.
“Given Ultra Tune’s previous breaches of the Franchising Code and the consumer law, ongoing monitoring of compliance is important”, said Ms Carver.
“The ACCC will pursue contempt of court action when it considers court orders, including those obtained for the protection of franchises, have been breached.”
