If you’re gonna say it, you better mean it!

Image via news.com.au 

Janine Allis, founder of Boost Juice and Retail Zoo, delivered a punch to two gym owners and Shark Tank hopefuls this week. The guys were pitching a food product to the Sharks, and the packaging revealed it was ‘engineered to accelerate muscle growth and increase energy levels’.

When asked whether they had completed any clinical trials, or had any proof that their food product actually did what the packaging said, the answer was no.

‘Misleading!’ was Allis’ response.

‘At the moment, you’re making health claims that aren’t proven which means it’s against the law. I would seriously think about repackaging because there’s a number of thing son here that are simply against the food standards codes. You need to get good legal advice…’

The Australian Consumer Law (the ACL) is pretty clear on what product packaging can’t do: packaging with statements that are incorrect, or likely to create a false impression, are not allowed.

The proof is in the prosecutions:

-       Nurofen maker, Reckitt Benckiser, was fined $1.7M for breaching the ACL with its ‘specific pain range’, where all products contained the same active ingredient, and did the same thing.

-       Arnott’s was fined by the ACCC for claims on its ‘Light & Crispy’ packaging for adopting a false comparator to inflate a health claim.

-       When Heinz’s US parent company acquired Australian product Golden Circle, Golden Circle packaging continued to represent that Golden Circle products were Australian owned. Heinz gave undertakings to the ACCC, and also donated more than 800,000 affected cans of fruit and vegetables to Australian welfare agencies.

-       Goodman Fielder, maker of non-dairy spread Logicol, engaged in misleading or deceptive conduct claiming on its pack ‘#1 RECCOMENDED for dietary change’. In this instance, it was competitor Unilever Australia (manufacturer of competitor brand Flora Pro-Activ) that sued Goodman Fielder for the breach.

Takeaway

It’s a bitter pill to swallow when you’ve spent considerable time, money and effort designing eye catching, memorable packaging for a product and marketed that product to stockists and consumers, only to find out it breaches consumer laws and must be changed.

Claims about products must be true, accurate and capable of being substantiated, or you run the risk of an ACCC prosecution, or a rival competitor seeking to leverage your mistake to their advantage.

Unsure? Get legal advice – investing in peace of mind may save huge expense down the track.

Contact the team at Rouse Lawyers today.

Law Society Warns Against Will Kits

The Queensland Law Society has issued a warning against do-it-yourself will kits:

“A large percentage of Australians believe that filling out a will kit from their local news agency or downloaded from the internet, will cover them when they pass away. Decades ago that might have been true. But in a modern complex technological world, it is not.

Gone are the days where people simply had a house, a car and a few dollars in the bank. Once upon a time a will might have dealt with those assets. That is no longer the case.

Anyone who relies on a downloaded will to give effect to the distribution of your assets on your death, is taking dangerous risks for yourself, your family and loved ones.

Why?

These days we have far more complex ways of saving for our future. Unlike 40 years ago, we all now have Superannuation. Our banks are no longer that large sandstone building in the middle of town. Banks accounts are online. A growing number of us have insurance as a safety net for our families. Many of us have shares – Australian and international. The list goes on.

Many mistakenly believe that all their assets are covered under a simple will that, once signed, means their wishes will be carried out following their death.

In reality, many of these modern day assets are not covered by a will, and those that are, remain exposed to claims. They can be exposed because the laws change according to where you live and where your asset is kept.

On top of that, we are living longer and that is resulting in more and more people losing capacity. Many people overlook the impact a Power of Attorney can have on assets in a will.

Also unlike 40 years ago, many people are now living in retirement villages or nursing homes. Retirements plans and nursing home care impacts on your estate.

These are just a few of the matters that are not covered by filling out that will kit. Seeking legal advice from your trusted, local solicitor is key to ensuring your wishes are carried out when you lose capacity and pass away.

Solicitors are independent legal advisors with no stake in who gets what from you. They are properly qualified, licensed and fully insured.  Most importantly they are duty bound to act in the best interests of you – their client. Significantly, lawyers are charged with protecting your confidentiality even after you die – no other advisor has this duty.

With Seniors’ Week running from 19-26 August, I strongly urge all adult Queenslanders to ensure you have your wishes recorded with the advice of a qualified solicitor to protect the future of your care, the future of your assets, and to give you peace of mind.

Importantly, take the time to check in with your elderly neighbours and family members to make sure they are okay and have the conversation about getting their affairs in order to ensure their wishes are protected for the future.”

For a no-obligation, confidential discussion with our experienced team regarding all estate planning matters, contact Rouse Lawyers on 07 3648 9900.

This article was originally published by the Queensland Law Society.

Franchise OR LICENCE?

If it looks like a duck, walks like a duck and quacks like a duck, it probably is a duck. The same reasoning can be applied to whether a licence agreement constitutes a franchise agreement – it is a matter of substance over form.

Both licence agreements and franchise agreements can grant people the right to use intellectual property, including trademarks, brands and a business system.
There are differences between the two types of agreement, so if you are thinking of buying into a franchise you need to make sure of your ground. Under the Australian Franchising Code of Conduct, four elements must be met for an agreement to constitute a franchise agreement… 1. there is an agreement, either written, oral or implied 2. one person grants to another person the right to conduct a business offering, supplying or distributing goods or services under a system or marketing plan substantially determined, controlled or suggested by the franchisor 3. the business will be substantially or materially associated with a trademark, advertising or a commercial symbol owned, used or licensed by the franchisor or specified by the franchisor 4. before starting (or continuing) the business, the franchisee must pay or agree to pay the franchisor a fee. The fee can include an initial capital investment, payment for goods or services, or a royalty fee. It excludes payments for goods or services supplied on a genuine wholesale basis or repayment of a loan.

1. there is an agreement, either written, oral or implied 2. one person grants to another person the right to conduct a business offering, supplying or distributing goods or services under a system or marketing plan substantially determined, controlled or suggested by the franchisor 3. the business will be substantially or materially associated with a trademark, advertising or a commercial symbol owned, used or licensed by the franchisor or specified by the franchisor 4. before starting (or continuing) the business, the franchisee must pay or agree to pay the franchisor a fee. The fee can include an initial capital investment, payment for goods or services, or a royalty fee. It excludes payments for goods or services supplied on a genuine wholesale basis or repayment of a loan.

2. one person grants to another person the right to conduct a business offering, supplying or distributing goods or services under a system or marketing plan substantially determined, controlled or suggested by the franchisor 3. the business will be substantially or materially associated with a trademark, advertising or a commercial symbol owned, used or licensed by the franchisor or specified by the franchisor 4. before starting (or continuing) the business, the franchisee must pay or agree to pay the franchisor a fee. The fee can include an initial capital investment, payment for goods or services, or a royalty fee. It excludes payments for goods or services supplied on a genuine wholesale basis or repayment of a loan.

3. the business will be substantially or materially associated with a trademark, advertising or a commercial symbol owned, used or licensed by the franchisor or specified by the franchisor 4. before starting (or continuing) the business, the franchisee must pay or agree to pay the franchisor a fee. The fee can include an initial capital investment, payment for goods or services, or a royalty fee. It excludes payments for goods or services supplied on a genuine wholesale basis or repayment of a loan.

4. before starting (or continuing) the business, the franchisee must pay or agree to pay the franchisor a fee. The fee can include an initial capital investment, payment for goods or services, or a royalty fee. It excludes payments for goods or services supplied on a genuine wholesale basis or repayment of a loan.

All four elements are cumulative – in other words, all elements and all parts of each element must be present before the agreement can be classified as a franchise agreement. It does not matter what the agreement is called. If it meets all four criteria, it will constitute a franchise agreement for the purposes of the code. The main factor distinguishing a licence agreement from a franchise agreement is the degree of control and strict compliance with a business system inherent to franchise agreements. Licence agreements are commonly more relaxed in this regard.

CASE STUDY
The leading case relative to this area was the 2012 Federal Court decision in Rafferty v Madgwicks. In finding that a “rights agreement” was in fact a franchise agreement, the court set out relevant factors that could potentially indicate the existence of a franchise agreement. These included: 1. specific requirements for accounting and record-keeping, signage and merchandising, sales structures and reporting turnover 2. the franchisor’s right to audit account records and to approve marketing material 3. restrictions on the

These included: 1. specific requirements for accounting and record-keeping, signage and merchandising, sales structures and reporting turnover 2. the franchisor’s right to audit account records and to approve marketing material 3. restrictions on the

1. specific requirements for accounting and record-keeping, signage and merchandising, sales structures and reporting turnover 2. the franchisor’s right to audit account records and to approve marketing material 3. restrictions on the

2. the franchisor’s right to audit account records and to approve marketing material 3. restrictions on the

3. restrictions on the franchisee’s sale of competing products or services, use of the brand name and trademarks, and specific marketing or sales territories. For the document to constitute a franchise agreement, the system or marketing plan under the agreement must be substantially determined, controlled or suggested by the franchisor. The degree of control must be carefully considered, along with the extent to which the franchisee’s business involves the sale of the franchisor’s goods or services.

The details of such a system or marketing plan do not need to be set out in the agreement. It will be enough for the business to be proved a franchise if the agreement allows the franchisor to exercise this control.

Just because an agreement is not called or intended to be a franchise agreement, it may nevertheless be caught within the ambit of the code, which is intended to protect franchisees involved in transactions where there is inequality of bargaining power. Therefore it is important to look at the substance of an agreement to determine whether it will be governed by the code. Heavy obligations are placed on both parties under the code, as well as consequences for non-compliance. This makes it essential to always obtain legal advice before entering into commercial agreements to ensure full compliance with the relevant laws.

Need advice about your Franchise Agreement?  Talk to the Franchising team at Rouse Lawyers. Contact us today!

Article was previously published in the July/August edition of Franchise Business Magazine.