Allphones directors accused of deceiving franchisees

By Matthew Henry

SYDNEY: The Australian Competition and Consumer Commission (ACCC) has accused mobile phone retailer Allphones of ‘unconscionable conduct’ towards its own franchisees, and will pursue a number of its senior directors in the Federal Court.

The ACCC today leveled allegations against the telecommunications retailer and claimed three of its directors engaged in “misleading and deceptive conduct and unconscionable conduct towards its franchisees”.

Allphones, which recently opened its 150th store and claims to be Australia’s largest independent telecommunications retailer, is said to have failed to pay certain income to franchisees, implemented policies targeting classes of franchisees and forced some to acquiesce to its will by threats and harsh conduct.

Allphones executives named in the legal action, which will commence Friday-week in Sydney, include director and CEO, Matthew Donnellan, director and COO, Tony Baker, and former national franchising manager, Ian Harkin.

All three are said to have been “knowingly concerned in or party to the contravening conduct”.

According to the ACCC, Allphones operates a franchise system where it controls product distribution, franchisee income and third party negotiations.

“The ACCC alleges that Allphones engaged in false or misleading and deceptive conduct towards potential and current franchisees,” said the watchdog in a statement today.

“This includes allegations that Allphones misrepresented how it shares profits with franchisees, bargains with third parties on behalf of its franchisees and operates its franchise system.”

The ACCC claims Allphones’ conduct was in contravention of the Franchising Code of Conduct and sections of the Trade Practices Act 1974.

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