ACCC slams lending company for breaching Franchise Code

A personal lending company has agreed to offer to release franchisees from their franchise agreements and offer them refunds after an investigation by the Australian Competition and Consumer Commission.

Australian Loans Management, which operates a finance broking business called Active Money, was investigated after the consumer watchdog became concerned that the “licence agreements” which Active Money was promoting and selling were actually franchisee agreements that were subject to the Franchising Code.

ALM has admitted it misled franchisees by claiming the licence agreement was not a franchise agreement, and potentially misled franchisees into believing that they were not entitled to the rights and remedies afforded by the Code.

Under the Code, franchisees are afforded a number of protections, including disclosure documents, a seven-day cooling off period and the right to seek advice from independent experts.

“The Franchising Code provides important safeguards to help ensure prospective franchisees are fully informed about what they are buying,” ACCC chairman Graeme Samuel said in a statement.

“The disclosure requirements are a key feature of the Code and failure to provide a disclosure document is unacceptable and unlawful conduct. Franchisors cannot circumvent the Code by simply claiming that the agreement is not a franchise agreement.”

ALM and Active Money will provide existing franchisees with the opportunity to cancel their existing licence agreement and obtain a full refund of all monies paid to ALM.

According to its website, Active Money has been operating since 1997 and is focused on the renovation and home improvement sector, with the financing of products such as shade sails, fencing, decking and pergolas, heating, cooling, electrical and white goods, communication equipment and ride-on mowers.