Franchisee boost as “unfair” Uber Eats contract terms dropped

By Nick Hall | 17 Jul 2019 View comments

Fast-food franchisees have received a welcomed boost, with meal delivery platform Uber Eats committing to drop “unfair” contract terms, following an investigation by the Australian Competition and Consumer Commission (ACCC).

Under Uber Eats’ previous contract terms, restaurants were responsible for the delivery of orders, despite having little control over the process once food left the premise.

Additionally, Uber Eats had the right to refund customers and deduct that amount from the restaurant, regardless of whether it was at fault or not.

Rod Sims, ACCC chair said after a lengthy investigation into the contracts, the watchdog was not satisfied they represented a fair approach.

“We consider these terms to be unfair because they appear to cause a significant imbalance between restaurants and Uber Eats; the terms were not reasonably necessary to protect Uber Eats and could cause detriment to restaurants,” he said.

The ACCC went on to reveal that since the investigations concluded, Uber Eats has made amendments to the contracts.

“Following our investigation, Uber Eats has committed to changing its contract terms that we believe are unfair, because they make restaurants responsible and financially liable for elements outside of their control,” Sims said.

Uber Eats contract update

The new Uber Eats contract amendments see restaurant partners with a renewed control over their own financial liability, a much-needed boost for franchisees.

Earlier this year, Ross Worth, CEO of embattled franchise chain Hog’s Australia cited the emergence of delivery platforms as key disruptor in the casual dining space. The growing demand for multi-platform representation has squeezed profitability for franchisees, however the latest update could be a positive sign of things to come.

Under the amended Uber Eats contract, restaurants will be able to dispute responsibility for any refunds to customers, with the delivery platform to consider the dispute.

“We will continue to monitor Uber Eats’ conduct to ensure restaurants are not unfairly held responsible for matters outside of their control and Uber Eats does not hold anyone else responsible for parts of the service it controls,” Sims said.

Sims suggested the Uber Eats contract investigation highlighted how easy it is for small business operators to be taken advantage of.

“Ensuring small businesses aren’t subject to unfair contract terms by larger businesses is one of our top priorities,” he said.

“Business are warned that if they include unfair contract terms in their contracts, they will risk close scrutiny from the ACCC.”

Impact on Australian Consumer Law

Under the Australian Consumer Law (ACL), a large business including or relying upon an unfair contract terms against a smaller business is not illegal and penalties cannot be imposed.

“We have called for legislative changes so the ACCC can seek penalties and compensation for small businesses where large businesses impose unfair terms.” Sims said.

“We welcome the Government’s commitment in March this year to consult on options to strengthen unfair contract term protections for small business.”

The Uber Eats contract changes are expected to be completed by December 2019. Uber Eats has committed not to enforce the terms that the ACCC considers to be unfair while these changes are completed.