Last month the Full Federal Court dismissed Geowash’s appeal against a 2019 decision that fined them $4.2m in for breaches of the Australian Consumer Law.
Australian Consumer Law breaches
- Geowash charged franchisees to establish and fit-out their site, but in reality, the majority of this money went to pay commissions to its director Sanam Ali and the franchising manager Charles Cameron.
- Geowash also enticed new franchisees in by falsely claiming that they could make gross revenues of $70,216 and gross profits of $30,439 over an average of 28 days.
- The Federal Court found that Geowash failed to act in good faith in relation to selling and marketing franchises.
Penalties
- Geowash was fined $2.5 million.
- The director Sanam Ali was fined $1.045 million and ordered to pay $500,000 as partial redress to the franchisees. The franchising manager Charles Cameron was also fined $656,000.
- Sanam Ali and Charles Cameron were also banned from managing a corporation for 5 and 4 years respectively.
Appeal
Ms. Ali and Mr. Cameron appealed the decision to the Full Federal Court.
In June 2021, the Court dismissed their appeal saying that:
- Ms. Ali and Mr. Cameron were knowingly involved in Geowash’s unconscionable conduct.
- There was deliberate deceptiveness and dishonesty
- Geowash’s business model was based on taking money from people through false representations
? Key takeaways
For franchisees, always seek advice and do your due diligence before entering a franchise agreement and making a payment.
For franchising advice, book a free 15 minute discovery call with Legalite here. We can ensure that you’re protected.