Monday, 26 March 2007
I rise to raise, through this House, a matter that should be a worrying concern to many small businesses throughout Australia, particularly those in the franchise business. The issue concerns the trade practices of a well-known franchisor in Australia, Bakers Delight, and allegations of unconscionable conduct on their part and that of the bank involved, the ANZ, which has agreed to withhold closure till the case goes to court.
The case surrounds Mrs Deanne Deleeuw, who purchased a Bakers Delight franchise in Vincentia, in my electorate of Gilmore, in December 2001. In the ensuing period two more outlets were purchased, one at Kiama and another in Shellharbour. I have been given certain information that suggests that the principals of the franchisors of Bakers Delight engaged in practices that I can only describe as not only dishonest but possibly criminal. It is a case that is worthy of further pursuit, and I will be doing this in the days ahead.
I make the following assertions. In this particular case, the franchisors, Bakers Delight, engaged in unconscionable conduct in various ways—that is, fraudulent accounting that reduced profitability; removal of any marketing and other support, based on a bogus breach, whilst still requiring weekly payments of marketing and royalty fees; collusion with the ANZ bank to create financial duress; inducing financial distress in order to arrange a fire sale of the business, causing financial catastrophe; and controlling the sales, in collusion with the bank, thus increasing a bogus ‘debt’ of around $1 million. This has now escalated to its current level—that is, in excess of $1.35 million. Overall current losses are in excess of $2 million. On the personal side are intimidation and threats, both physical and financial, condoned by the franchisor—matters serious enough to be referred to the NSW police.
These are serious allegations, and I suggest that they are only the tip of the iceberg. I have material being forwarded to me from other franchisees of Bakers Delight, all suggesting similar questionable practices which require further detailed investigation. I have brought this matter to the attention of the ACCC and have asked that they investigate the allegations as a matter of urgency. I will also be asking other agencies to bring their attention to the allegations raised.
Whilst it appears that there have been serious breaches of the Trade Practices Act, particularly with regard to the unconscionable practices, I would also suggest that grounds exist where there may have been breaches of criminal law. In any case, the actions of Bakers Delight have brought Mrs Deleeuw to the brink of devastation and bankruptcy. It seems that this has occurred without due scrutiny or concern with regard to the alleged breaches of the Trade Practices Act. Mrs Deleeuw now has insufficient funds to challenge the orchestrated robbery of her business, which has been engineered to cause failure so that it can be resold at a profit by Bakers Delight.
Small business is the backbone of this country and needs to be protected by the full weight of the law. It is totally unacceptable that Mrs Deleeuw has been put in this position. It is totally unacceptable that Mrs Deleeuw can be exploited in the way that she has been. It is totally unacceptable that a large franchisor like Bakers Delight can conspire to induce a breach of contract simply to make a fire sale, just to generate a large profit for themselves. It is totally unacceptable that any small business can be subjected to intimidation, commercial or criminal, without recourse to some form of effective protection. It is totally unacceptable that an organisation that engages in practices such as these is allowed to continue trading. It is totally unacceptable that a large, dominant entity can resort to standover tactics with impunity.
Very serious allegations have been raised, and if Mrs Deleeuw has been brought to a stage where she cannot be given her day in court because she has been sent to the wall by deceit and lies then this government must intervene on behalf of all small businesses. It is unacceptable that, because Mrs Deleeuw cannot find the funds necessary to challenge Bakers Delight in court, they can be allowed to get off scot-free. I will not allow this to happen, and I warn Bakers Delight that they are under scrutiny. I will be raising more specific details of this case and others that have been brought to my attention and will continue doing so until justice not only has been done but also has been seen to be done.