Tragic tale a 'classic injustice'

"There is something terribly wrong when the franchisee is left penniless despite winning in court." It gave heart to "rogue franchisors" who could continue to destroy franchisees' lives and livelihoods "knowing full well that the chances of ACCC intervention are minimal and the risk of a franchisee taking legal action is extremely low".
August 11, 2010

Tragic tale a 'classic injustice'
Chalpat Sonti

The case of a Perth man locked in a desperate legal fight against automotive giant Auto Masters shows the depths one of Australia's largest industries has plumbed, an expert says.

Dave Coombes, 50, of Ballajura, is seeking compensation from the federal government of at least $1.8 million after a 12-year battle in which he lost everything.

The former franchisee of motor vehicle repairer Auto Masters is broke despite a successful court action against the company, which he was forced to fight on his own after the Australian Competition and Consumer Commission refused to help.

Apart from losing his business and house, the issue has taken a terrible toll on Mr Coombes' family, while friends and employees have sold possessions and even stopped cashing pay cheques to help his fight.

Franchising expert Frank Zumbo, an associate professor at the University of NSW school of business law and taxation, has studied the case.

"It's a real tragedy that's sadly becoming more common within the franchising sector," he said.

"Tragically it shows how a franchisee can be badly let down by the franchisor, the ACCC and the legal system."

Mr Zumbo said Mr Coombes had been left stranded by "an ACCC that repeatedly fails to pursue cases in a timely way and by a judicial system where legal costs can far exceed the amount in dispute".

"The ultimate injustice in this case is that a franchisee can lose everything even though the franchisee plays by the rules and is vindicated by a court," he said.

"There is something terribly wrong when the franchisee is left penniless despite winning in court."

It gave heart to "rogue franchisors" who could continue to destroy franchisees' lives and livelihoods "knowing full well that the chances of ACCC intervention are minimal and the risk of a franchisee taking legal action is extremely low".

"The case amply demonstrates the long overdue need for greater accountability surrounding the ACCC's handling of franchising investigations," Mr Zumbo said.

"The ACCC is a law unto itself when it comes to handling franchising matters and it's time there was an independent review of its approach to franchising complaints and investigations.

"Such a review needs to occur as a matter of urgency given the ever increasing levels of dissatisfaction expressed by franchisees about the ACCC's lack of action and leadership on franchising matters."

Mr Zumbo repeated his calls for a franchising ombudsman who could help resolve disputes before they headed to court.

"That's urgently needed as the ACCC's repeated failure to weed out rogue franchisors coupled with the rapidly escalating cost of getting justice through the legal system means that franchisees are being let down very badly."


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