The ACCC has instituted proceedings against franchisor Megasave Couriers Australia Pty Ltd (Megasave) in the Federal Court, alleging that it misled prospective franchisees with false or misleading promises of guaranteed minimum weekly payments and annual income if they purchased a Megasave courier franchise.
It is also alleged that Megasave’s sole director, Mr Gary Bourne, was knowingly involved in the conduct.
The ACCC alleges that:
- from at least June 2019 to July 2020, Megasave represented to prospective franchisees that they would receive guaranteed minimum weekly payments (in most cases $2000 per week) for a period of time, usually for the first six months; and
- from at least June 2019 to April 2020, Megasave represented to prospective franchisees that they would be guaranteed a minimum annual income, which in most cases was $91,000.
The alleged false or misleading representations were in promotional statements and marketing material on Megasave’s website and in online advertisements, as well as in documents provided to prospective franchisees and communications by Mr Bourne and others.
The ACCC’s case is that Megasave continued to make these representations to prospective franchisees even after it had failed to make minimum weekly payments to existing franchisees, and the payments being made to those franchisees were not sufficient for them to earn the guaranteed annual income.
In addition, from late December 2019, Megasave allegedly imposed a condition on the payment of the minimum weekly payments requiring franchisees to submit weekly sales leads, which had not been disclosed to franchisees before they purchased their franchises.
“We received complaints from more than 30 franchisees, with many of them reporting that they had suffered serious financial harm as a result of Megasave and Mr Bourne’s conduct,” ACCC Deputy Chair Mick Keogh said.
“We allege Megasave and Mr Bourne made false promises of a secure initial income for potential franchisees in the form of guaranteed weekly payments, which influenced potential franchisees to decide to buy a courier franchise from Megasave.”
“This caused significant financial hardship and stress to franchisees who were expecting to receive the guaranteed minimum weekly payments and annual income after signing up. In a number of cases, these franchisees had taken out loans or used life savings to purchase the Megasave franchise,” Mr Keogh said.
“Purchasing a franchise is a big investment, and potential franchisees must be able to rely on the information from the franchisor being accurate.”
The ACCC is seeking penalties, redress for franchisees, disqualification orders against Mr Bourne, declarations, an order as to findings of fact, and costs. Interlocutory and final injunctions are also being sought to prevent Megasave and Mr Bourne from continuing to make the alleged representations.
On 19 June 2020, the ACCC obtained a Federal Court order freezing the assets of Megasave, Mr Bourne and other entities controlled by him. These orders have since been replaced by an undertaking to the Court by Mr Bourne in broadly similar terms, which remains in place until revoked by the Court.
Background
Megasave is a franchised courier delivery business that claims to have more than 50 franchises across Australia. It promotes itself as the fastest growing franchise business in the country.
Megasave has been marketing and selling courier franchises in Australia since at least April 2019 via its website, Seek Business and the Inside Franchise Business website.
The franchises have been advertised at different prices over time but most commonly were sold for approximately $27,500 per franchise.
The attached document below contains the ACCC’s initiating court document in relation to this matter. We will not be uploading further documents in the event this initial document is subsequently amended.
