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Behind The Headlines

 

New $100 underpayment class action against McDonald’s 

Fast food giant McDonald’s is facing a new underpayment class action in Australia after the Shop, Distributive and Allied Employees Association (SDA) launched a lawsuit against the corporation and 325 franchisees in the Federal Court of South Australia, according to media reports. 

 

The class action, which represents 25,000 current and former supervisors and managers seeking $100 million in backpay, alleges store management staff were required to perform unpaid half-hour pre-shift checks and after-shift tasks before and after their scheduled, paid shifts. 

 

According to the SDA, pre-shift tasks included cleaning dining and kitchen areas, reviewing calendars, and preparing machinery, while after-shift tasks included balancing the tills and safes, and recording waste, which one claimant has described as an expectation and not a choice. 

 

The SDA claims the practice has been occurring since December 2017, but a former McDonald’s manager claims that it was common for him to be unpaid for unloading trucks, attending meetings and training, and doing stock-takes 30 years ago.

 

McDonald’s is already facing a Federal Court lawsuit launched in August 2022 for allegedly refusing to grant employees their entitled rest breaks. In that action, the SDA is seeking $250 million in compensation plus penalties claiming McDonald’s has been systematic and deliberate in encouraging franchisees to deny workers paid rest breaks.  Read more 1; Read more 2; Read more 3; Read more 4; Read more 5

 

 

Pharmacy chain to list via $8.8 billion merger

Retail pharmacy franchise Chemist Warehouse and listed pharmaceutical supplies company Sigma Healthcare have announced plans to list on the Australian Securities Exchange (ASX) in a merger valued at $8.8 billion, according to a media report.

 

The merger, pending Australian Competition and Consumer Commission (ACCC) approval, is planned as a reverse listing through Sigma. With Chemist Warehouse supplying approximately 600 pharmacy-led stores through its franchise arrangements, and Sigma supporting 240 pharmacies under its Amcal and Discount Drug Store brands, significant scrutiny is expected from the regulator. The Pharmacy Guild of Australia has reportedly already urged the ACCC to urgently review the deal.

 

Under the proposed terms, Chemist Warehouse shareholders will own 85.75% of the merged entity and families of the business’ founders will hold 49% of the group. New shares will be issued at 70 cents per share and current major shareholders of Sigma will have most of their shares escrowed until August 2026.  Read more

 

 

Franchise shareholder class action as shares drop

Shareholders of listed Australian fast food operator Domino’s Pizza Enterprises (DMP) are being invited to join a class action in relation to a November 2021 company announcement by the business that resulted in a decline in share price of approximately 18%, according to the litigating legal firm Echo Law.

 

The class action alleges that, between 18 August 2021 and 3 November 2021 (inclusive), DMP engaged in misleading or deceptive conduct, made misleading statements, and breached its disclosure obligations with regard to expected performance in the Japanese market.

 

Eligible class action claimants are shareholders who acquired DMP securities on the Australian Stock Exchange (ASX) or were subject to long exposure to DMP shares by entering into equity swap confirmations, within the date range of the claim.  Read more

 

The class action is being compiled as DMP announced its fourth profit downgrade in three years, with the company’s share price dropping almost 30% on the first morning of trade following the announcement.  Read more

 

 

Franchisee’s lockdown lawsuit against state govt dismissed

A Victorian franchisee of home services brand Jim’s Mowing who sued the Victorian government’s state Department of Health for lost income as a result of that state’s extended lockdowns during the pandemic has had his case dismissed by the Victorian Civil and Administrative Tribunal (VCAT), according to court records.

 

VCAT ordered the dismissal of proceedings on 14 December 2023 after finding that the issue at the heart of the case had been determined in similar previous tribunal hearings. The franchisee had sought compensation of $24,000 per week from 5 August 2020 until he was again able to operate his business following lockdown restrictions during the pandemic, after an initial application was lodged with the Secretary of the then Victorian Department of Health and Human Services for compensation due to Stage 4 restrictions across the greater Melbourne area. Cost for the case are yet to be determined.  Read more

 

 

ACCC issues warning to franchisors re unfair terms

The Australian Competition and Consumer Commission (ACCC) is warning Australian franchisors to urgently review and amend their franchise agreements or risk enforcement action following the introduction of penalties last month to apply to unfair contract terms, according to an ACCC release.

 

The ACCC recently conducted a targeted review of the franchise agreements of 10 franchise brands with less than 40 franchisees each. The review found that while the franchise agreements were largely compliant with the Franchising Code of Conduct, it identified concerns with contract clauses relating to unilateral variations, withholding and set-off payments, audit powers, restraint of trade and termination clauses. 

 

Franchisors are warned to review their agreements to ensure they do not contain unfair contract terms that are too broad and go beyond those reasonably necessary to protect the franchisor’s legitimate business interests. 

 

The results of the ACCC’s targeted review, including details of common unfair contract terms found in franchise agreements, can be downloaded here.  

 

 

Car hire brand reverses on electric vehicles

International car hire brand Hertz will reduce its fleet of electric vehicles (EV) in the United States by about 20,000 cars just two years after first introducing EV’s for rent, according to a media report.

 

Despite initial plans to convert 25% of its US vehicle fleet to EV’s by the end of 2024, Hertz claims that its EV’s incur higher expenses relating to collision and damage, and that attempts to limit the speed of EV’s and promoting them to experienced drivers had limited success. The company will replace the EV’s with fossil-fuel vehicles.  Read more

 

 

Arrest for attempt to deep fry worker’s head

The husband of a trainee manager at a McDonald’s restaurant in the United States has been arrested for assaulting his wife’s co-worker, according to a media report.

 

The trainee manager reportedly called her husband for assistance with allegedly disrespectful employees. When summoned, her semi-truck driving husband who is also a pastor at Elevated Life International Ministries allegedly attempted to push his wife’s co-worker’s head into a deep fryer and punched him several times in the face before being physically pulled off his victim by other employees of the outlet.

 

The assailant has been charged with assault and battery and released on a bond of USD $1,000 pending a court appearance on January 22, 2024.  Read more

 

 

Jason Gehrke to present at IFA Convention CFE sessions

Franchise Advisory Centre director Jason Gehrke will present a full day of Certified Franchise Executive (CFE) education sessions on the opening day of the International Franchise Association’s (IFA) annual convention in February.

 

The convention, which attradts around 4,000 participants primarily from the United States but also from 20 other countries, will be held in Phoenix, Arizona. Jason will be presenting two back-to-back half-day CFE workshops for franchisors on Franchise Recruitment Essentials, and Managing Franchise Resales. In 2022, the Franchise Advisory Centre partnered with the IFA to deliver online and interactive franchise education to franchisors in the US on a range of franchise leadership and management topics.  Read more

 

 

 

Jason Gehrke is the director of the Franchise Advisory Centre and has been involved in franchising for more than 30 years at franchisee, franchisor and advisor level. He advises both existing and potential franchisors and franchisees, and conducts franchise education programs throughout Australia. He has been awarded for his franchise achievements, and publishes Franchise News, Australia’s only fortnightly electronic news bulletin on franchising issues. In his spare time, Jason is a passionate collector of military antiques. www.franchiseadvice.com.au