In a, the Australian Competition and Consumer Commission (“ACCC”) has announced that it has successfully prosecuted a former hand car wash and detailing franchisor Geowash Pty Ltd (“Geowash”) in the recent case of ACCC v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3)  FCA 72 (8 February 2019).
Geowash was prosecuted for acting unconscionably, making false or misleading representations, and failing to act in good faith in breach of the Franchising Code of Conduct (the “Code”) (contained in Schedule 1 to the Competition and Consumer (Industry Codes—Franchising) Regulation 2014) in relation to the sale and marketing of its franchises.
From February 2013 to October 2016, Geowash offered carwash franchises to interested parties in Australia. The franchises were for hand car wash and detailing businesses to be conducted at particular sites identified in accordance with Geowash's policy.
In late 2015, the ACCC began investigating Geowash and subsequently launched court proceedings. In a decision handed down on 8 February 2019, the Federal Court ("the Court") found that Geowash made false or misleading representations on its website by:
The Court found the company acted unconscionably by charging what franchisees were willing to pay for fit-out and establishment costs rather than the actual likely cost of establishing those sites.
Geowash was also found to have created a “false impression” that franchisee charges would go directly to fitting out car-wash sites, when a “large proportion” went to commission payments for Geowash employees. Colvin J said at [para 682]:
It was noted that Geowash’s director, Ms Sanam Ali, was found to be knowingly involved in all of Geowash’s conduct and Mr Charles Cameron, Geowash’s Franchising Manager, was found to be knowingly involved in Geowash’s "unconscionable conduct and failures to act in good faith".
The Court found that the likely consequence of Geowash’s conduct was that the substantial amounts of money paid by franchisees were not available to establish Geowash car wash sites and as a result these sites could not be delivered or would be of an inferior standard.
It was also noted this practice likely starved the sites of funds, resulting in an inferior service to customers. His Honour commented at [para 12] of the judgment:
Mick Keogh, ACCC Deputy Chair said of this latest action:
According to, a hearing to determine penalties and other orders sought by the ACCC will be scheduled for later in 2019.
On 18 January 2019, the Federal Court handed down a penalty of $2.6m against Ultra Tune Australia (see ACCC v Ultra Tune Australia Pty Ltd  FCA 12 (18 January 2019)) for breaching both the Franchising Code of Conduct and the Australian Consumer Law (ACL) (the ACL is contained in Sch 2 to the Competition and Consumer Act 2010 (Cth)).
In handing down his judgment, Bromwich J stated at [para 339]:
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Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3)  FCA 72 (8 February 2019)
Australian Competition and Consumer Commission v Ultra Tune Australia Pty Ltd  FCA 12 (18 January 2019)
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