Domino’s first to pay under new Franchising Code

SmartCompany

The Australian Competition and Consumer Commission has issued the first infringement notices for alleged breaches of Australia’s revised Franchising Code, hitting pizza giant Domino’s Pizza Enterprises with $18,000 in fines.

The ACCC issued the notices because it believes the fast food company failed to provide franchisees with a financial statement for the company’s marketing fund and an auditor’s report within the required time frames under the new code. However, payment of an infringement notice by a company is not necessarily an admission that the code has been breached.

The new requirements compel a company’s head office to supply annual financial statements to franchisees of any marketing funds they are required to contribute to, and to do this within four months of the end of the financial year. Audit reports of these funds must also be completed and passed on to franchisees within 30 days of a review.

ACCC Deputy Chair Dr Michael Schaper said marketing funds are a major expense for franchisees, and the activities of these funds need to be explained in a timely manner.

“Ensuring small businesses receive the protection of industry codes is an enforcement priority for the ACCC,” he said in a statement this morning.

A spokesperson for Domino’s told SmartCompany this morning the reports were not provided to franchisees due to an “oversight”.

“Domino’s AdFund was independently audited in 2016, which confirmed all expenditure was appropriate and meeting the requirements of the Franchising Code of Conduct,” the spokesperson says.

“However we accept we did not provide a copy of this audit report on time to our franchisees, or the required financial statements in previous years — this was an oversight. Domino’s apologises to our franchisees for this honest mistake, and will ensure an annual audit report and financial statement are distributed to franchisees as required by the Code each year going forward.”