Megasave Couriers penalised $1.9m for misleading franchise buyers

By Sarah Stowe | 29 Apr 2021 View comments

Megasave Couriers Australia Pty Ltd is to pay $1.9 million in penalties for making false or misleading representations to prospective franchisees.

The firm’s sole director Gary Bourne has also been ordered to pay a penalty of $120,000.

The penalties were ordered by the Federal Court, following a legal case brought by the Australian Competition and Consumer Commission which resulted in Bourne’s five year disqualification from managing corporations for five years.

In question was the issue of making false or misleading representations about guaranteed minimum weekly payments and guaranteed annual income. In March 2021, the Court declared by consent that Megasave had indeed flouted the law over the claims, and that its sole director Gary Bourne was knowingly concerned in the conduct.

ACCC deputy chair Mick Keogh said “Conduct of this kind warrants strong deterrent penalties. Many Megasave franchisees lost substantial savings and endured significant distress.

“Franchisees made large upfront payments to purchase their Megasave franchise on the understanding that the business was low-risk and profitable but this was not the case.”

Keogh said “Many franchisees left Megasave within a short time after either not receiving payments or receiving payments far less than was promised, losing their investment.”

Megasave and Gary Bourne are also ordered to pay $500,000 to affected franchisees as partial redress for their losses and the funds paid will be equally distributed between them.

Eligible franchisees will be contacted by the Australian Government Solicitor with further information by the end of July 2021.

Keogh said “The ACCC took this action because misleading conduct in the franchising sector has the potential for devastating consequences for franchisees who rely on misleading claims by franchisors, and who may not have the resources or ability to enforce their legal rights.

“Franchisors are reminded that they must not make misleading representations to franchisees about the business they are buying, including about potential earnings or guaranteed income.”

Earlier this year the ACCC indicated that the franchising sector remains a priority for the commission.