Franchisor accuses ACCC of “witch hunt” over accusations franchisees were mislead

The franchisor behind a personalised chocolate franchise has accused the Australian Competition and Consumer Commission of a “witch hunt” after it accused him of making misleading and deceptive representations to franchisees.

Troy Patching, the sole director of Personalised Chocolates 4U, which has 45 franchises, says he is still trying to understand the ACCC’s accusations, which were contained in a 70 page document served on him this week.

The corporate watchdog announced yesterday that it instituted proceedings against the franchise system and Patching in the Federal Court in Sydney.

The ACCC has alleged that PC4U marketed and sold personalised chocolate franchises by making false, misleading and deceptive representations, including claims that:

• Software essential to the franchise business would be provided to franchisees when it was not.
• A manual would be provided to franchisees when they entered into the franchise agreement when it was not.
• Refunds of franchise fees would be available on certain conditions when some of those conditions were impossible for the franchisee to meet.

The watchdog also alleges that PC4U is now promoting itself as a licence system when it is in fact a franchise system.

Patching says he is still trying to understand the ACCC’s claims.

“We’re certainly looking at what their witch hunt is and what they are actually after,” he says.

“They served a 70 page document on me and it’s not written in layman’s terms.”

While Patching concedes there have been some “grey areas” in the past, he claims most of the problems have been solved.

He admits there have been some issues with software, but says they have now been corrected. He also claims problems with the manual have been rectified.

Patching has also hit out at the claims made by the ACCC on the subject of refunds. While he says he has paid partial refunds to some franchisees as demonstration of “good will” he claims no franchisees have ever requested a refund under the refund guarantee he has in place.

“There are some grey issues,” Patching says. “But in saying that, the students of mine that actually implement the system make money.”

Patching has had a long-running battle with the consumer watchdog. He says he was asked to attend a hearing in December 2008 and told to surrender important company documents, including bank statements and contracts.

He claims requests to return these documents met with delays from the ACCC. Patching claims this “crippled the business” and brought it to “a standstill” and says he was forced to lay off staff as a result.

Another contentious point between the two parties is whether PC4U is a franchise or a licensed business system. Patching says he has advice he is not a franchisor – and therefore not subject to the Franchise Code – but the ACCC disagrees.

The ACCC declined to comment this morning ahead of a scheduling conference in Sydney on August 28.

Patching says he will continue to work through the watchdog’s allegations and may seek clarification on some points.

“I’ve been in this industry for 10 years. I’m certainly not about to go anywhere and we are making bigger inroads than ever,” he says.

“If the ACCC tries to close us down, they are certainly going to be taking a lot of people down with them.”