This article appears in the July/August 2014 issue of Business Franchise Australia & New Zealand
The quirks of the franchising industry make advertising an interesting dynamic. For the most part, franchisors dictate marketing arrangements to ensure consistency across the network.
While franchisors strictly handle the big budget campaigns, at a regional level franchisees deal with customers and work to attract new clients. So, it pays to know the law.
All levels and types of advertising and selling are covered by the Australian Consumer Law (ACL) and two fundamental rules apply. First, don’t engage in conduct that is likely to mislead or deceive. Second, don’t make false or misleading claims. Franchisors and franchisees frequently seek advice from the Australian Competition and Consumer Commission (ACCC) about advertising and selling. Our free online guide is available at www.accc.gov.au/publications/advertising-selling.
Don’t mislead or deceive
The ACL ensures businesses compete on a level playing field in advertising products and services.
It is illegal for businesses to engage in conduct that leads a customer into error or to believe something that isn’t so. In other words, you cannot lie to people or lead them to a wrong conclusion; you cannot create a false impression or leave out important information; and you cannot make false or inaccurate claims.
Don’t make false or misleading claims
Any statements made about products or services must be true and accurate. You must be able to substantiate your claims, so take care when making statements about the quality, price or benefits of goods or services. For instance, the ACCC has taken court action against a number of individual Harvey Norman franchisees. We alleged in-store sales staff made false or misleading representations to consumers about their rights to repair, replace or refund faulty products.
While the online environment has led to innovative selling methods, the law still applies. For example, using social media such as Facebook, Twitter and YouTube as promotional tools brings with it the responsibility to ensure all content on your pages is accurate, irrespective of who put it there.
It’s also misleading to write or commission reviews about your own business as if they are from a genuine consumer. The same goes for posting fake negative reviews about your competitors.
Not sure how to manage your online reviews, download the ACCC’s guide for business and review platforms at http://www.accc.gov.au/publications/online-reviews-a-guide-for-business-review-platforms
The overall impression counts
The most important question to ask is whether the overall impression created by advertising is false or inaccurate. Sometimes problems can arise from what you say or what don’t say.
When considering the overall impression put yourself in the shoes of the class of consumers likely to be affected by the advertising. Have important details been left out or hidden in the fine print? Is the total price displayed? Are there any contradictory statements or unnecessary jargon? Do logos, symbols and pictures create confusion or the wrong impression?
The ACCC has a range of tools to take action against false or misleading claims. This includes powers to require businesses to substantiate their claims and the ability to issue infringement notices and use court enforceable undertakings, as well as the ability to seek penalties in the courts of up to $1.1 million.
Dr Michael Schaper is Deputy Chairman of the Australian Competition and Consumer Commission.
For franchising information, go to: