The competition watchdog has taken aim at WA-focused car wash franchisor Geowash for allegedly awarding unlawful commission payments and making misleading claims about profitability.
The Australian Competition and Consumer Commission said today it had applied to the Federal Court for leave to begin proceedings against Geowash, which is currently operating subject to a deed of company arrangement after it fell into the hands of Cor Cordis as administrators in October.
Nine of 10 Geowash franchises are located in Perth.
The watchdog will allege that from at least November 2015 to May 2016, Geowash made false or misleading representations on its website that prospective franchisees could make about $70,000 in revenue and about $30,000 in profit in an average month, and that it held commercial relationships with Nissan, Kia, Renault, Audi, Emirates, Shell, Hertz, Holden, Ikea and Thirfty when it didn’t.
The ACCC will also allege that Geowash directed a “substantial portion” of franchisee funds for purposes not allowed in the franchise agreement and not disclosed to franchisees.
Some of those funds were paid as commissions to Geowash director Sanam Ali and national franchising manager Charles Cameron.
“The ACCC investigated Geowash’s conduct following complaints from franchisees alleging that they had been misled about their establishment costs, and ultimately had not been provided with an operating car wash franchise,” ACCC deputy chair Michael Schaper said.
“The ACCC was particularly concerned that, allegedly, franchisee funds were used for purposes other than those permitted by the franchise agreements, including as commissions paid to the director and franchise manager.”
If granted leave by the court, ACCC will seek payment of pecuniary penalties, corrective notice orders and costs, as well as the disqualification of Ms Ali and Mr Cameron from managing corporations for five years.
