Punishment `not enough' for Allphones' bullying tactics

In the Allphones case it was found that the retailer introduced a "no dickheads" policy to weed out underperforming businesses and those identified as being disloyal to the company. Allphones then employed a range of tactics to force "dickhead franchisees" out of its retail network by withholding stock, stopping payments and threatening to terminate their dealer agreements.

The Australian
May 4, 2010

Punishment ‘not enough’ for Allphones' bullying tactics
Mitchell Bingemann

A POSSE of disgruntled former and current Allphones franchisees are banding together to pressure regulators to take harsher action against franchises that abuse their power over small business owners.

The small group, which is in its formative stage, was formed after the success of a class action suit in the Federal Court against Allphones Retail for engaging in unconscionable conduct.

In that case, which ended last week, Allphones was ordered to pay $3 million in damages to 55 franchisees for engaging in a campaign to bully dissenting franchisees to bring them into line. But while the class action was a success, many of the franchisees were unsatisfied with the outcome which some have described as little more than a "slap on the wrists".

"Allphones and its directors haven't received enough pain or punishment for what they put us through. Every week we were always under stress because we weren't being paid the correct commissions," said Mildura Allphones franchise owner Ron Ward.

The group of franchisees, which includes Allphones franchisees from Adelaide, Sydney and Western Australia, now wants to raise awareness about the lax franchise laws that allow franchisors to take advantage of small business owners.

In the Allphones case it was found that the retailer introduced a "no dickheads" policy to weed out underperforming businesses and those identified as being disloyal to the company.

Allphones then employed a range of tactics to force "dickhead franchisees" out of its retail network by withholding stock, stopping payments and threatening to terminate their dealer agreements.

While pleased with the outcome of the case, some of the affected franchisees feel the ACCC, which led the case on behalf of the 55 franchisees, did not pursue Allphones to the full extent over its alleged abuses.

"I've dealt with the ACCC for over four years on this and they have been fantastic and professional and very thorough. But with the huge amount of evidence they have I don't believe they went as far or as hard as they could have on Allphones," Mr Ward said. "We want accountability, transparency and for Allphones to be open about what happened."

Other franchisees expressed disappointment at the financial penalty imposed on Allphones. The $3m settlement is to be distributed among the 55 franchisees represented in the action, approximately $55,000 each.

"The company have basically forgone 12 months of profits, not their wages. How is that a punishment? The compensation will never be enough to cover the stress and the emotional roller-coaster that I and other franchisees went through.

"It was a terrible period of our life and many franchisees lost homes and marriages because of the stress during that time," said one franchisee who wished to remain anonymous.

http://www.theaustralian.com.au/australian-it/punishment-not-enough-for-allphones-bullying-tactics/story-e6frgakx-1225861764812


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