Husqvarna Australia Pty Ltd. is a wholesale company of outdoor power products. It has been admitted by the company that it has misinformed its franchisees in context of the Franchising Code of Conduct. Husqvarna Australia is a subsidiary company of the Swedish Husqvarna Group that has entered into undertaking with the ACCC for the purposes of section 87B of the Competition and Consumer Act 2010, when the watchdog that is the ACCC considered the issues regarding the agreements of its 343 wholesalers all over in Australia. In this context, the company had to rewrite its dealership agreements as well.
It was the concern of ACCC that Husqvarna has been involved in the breach of ACL because it has informed its wholesalers that its dealership agreements were not the franchising agreements, which was considered to be as misleading and infringement of the ACL (Holdingredlich, 2018). The company intended not to provide right to protections under Franchising Code to its wholesalers or Franchisees. So, ACCC considered it as the contravention section 27 of the Franchising Code of Conduct (FCC), section 51 of the ACCC and section 18 and 29 of the ACL. ACCC considered dealership agreements to be as the franchising agreement and the dealers were to be provided protections under FCC (Marketwatch, 2018).
In addition, Husqvarna terminated few of its dealers due to infringement of the Franchising Code which was the infringement of section 51 of the ACCC and section 27 of the FCC. Furthermore, ACCC was also concerned about the existence of unfair terms in the dealership agreements, which was defended by the company saying that agreements were according to the possible standard form documents and did not included any unfair terms. The dealership agreement containing the terms that were unfair were void and illegal under section 23 of the ACL. Such unfair terms were considered to be as void under Part 2-3 of the ACL (Keating, 2018).
The key message associated with Husqvarna case is that it is considered as a franchise agreement if it fulfils the criteria as mentioned in the definition of franchise agreement and it is covered under the Franchising Code applicable to that specific franchise agreement. If the franchisor has considerable control over business operations, brand name and business procedures are same, and the business operator pays a considerable amount of money to obtain right to use brand name and procedures.
However, it was later on claimed by the ACCC that Husqvarna Australia cooperated in the investigation and rewritten its dealership agreements and agreed not to implement the terms considered by the ACCC (Acapmag, 2018). Husqvarna Australia responded to the ACCC that the subsidiary has contravened the section 18 and section 29 of the ACL, section 27 and other clauses of FCC as well as section 51 of the CCA (ACCC, 2018). It agreed that few of the terms of the dealership agreement entered into by the Husqvarna Australia are supposed to be the standard form contract and the terms which were unfair were considered to be as void under section 23 of the ACL. Husqvarna Australia agreed to the concerns of the ACCC and took into consideration all their concerns related to the dealership agreement with their franchisees. The subsidiary created a new dealership agreement in the format of standard form contract and the disclosure agreement for the subsidiary to ensure its compliance with the FCC as well as the CCA and in this manner, offered this undertaking to the ACCC. It proved that dealership agreement is considered as a franchisee agreement and all the contracts with the dealers are held enforceable under ACCC and FCC (ACCC, 2018).
Acapmag. (2018). ACCC Opening Statement – Parliamentary Inquiry Into The Franchising Code of Conduct. Retrieved from Acapmag.com.au: https://acapmag.com.au/2018/09/accc-opening-statement-parliamentary-inquiry-into-the-franchising-code-of-conduct/
ACCC. (2018). Franchisee rights denied in Husqvarna code breach. Retrieved from accc.gov.au: https://www.accc.gov.au/media-release/franchisee-rights-denied-in-husqvarna-code-breach
ACCC. (2018). Husqvarna Australia Pty Ltd. Retrieved from accc.gov.au: https://www.accc.gov.au/public-registers/undertakings-registers/husqvarna-australia-pty-ltd
Holdingredlich. (2018). What's News in Competition & Consumer Law? – 4 September 2018. Retrieved from Holdingredlich.com: https://www.holdingredlich.com/blog/4-september-2018-competition-consumer-law
Keating, E. (2018). Husqvarna admits it likely misled franchisees following ACCC action. Retrieved from smartcompany.com.au: https://www.smartcompany.com.au/business-advice/franchising/husqvarna-admits-it-likely-misled-franchisees-following-accc-action/
Marketwatch. (2018). Australia : Franchisee rights denied in Husqvarna code breach. Retrieved from Marketwatch.com: https://www.marketwatch.com/press-release/australia-franchisee-rights-denied-in-husqvarna-code-breach-2018-08-30