Market leading pizza chain Domino’s has been handed two $9000 fines by the Australian Consumer and Competition Commission (ACCC) for breaches of the Franchising Code of Conduct.
Domino’s is the first company to receive penalties for non-compliance with the Franchising Code under new rules launched in January 2015. The breaches involved the marketing fund all franchises are expected to contribute towards.
The ACCC issued the infringement notices because the company failed to provide franchisees with both an annual marketing fund financial statement and an auditor’s report within the time limits prescribed under the code.
ACCC deputy chair Dr Michael Schaper said disclosure is important because the contributions are often a significant expense.
“Ensuring small businesses receive the protection of industry codes is an enforcement priority for the ACCC,” he said.
Domino’s provided the 2015-16 marketing fund financial statement and auditor’s report to its franchisees in late February 2017, which is outside the timeframes under the code.
The penalty for an alleged breach of the Franchising Code is fixed at $9000 for a body corporate, but paying the fine is not considered an admission of a contravention of the code.
A Domino’s spokesperson told Business Insider that failing to pass on the details to franchisees was an “oversight”.
“Domino’s AdFund was independently audited in 2016, which confirmed all expenditure was appropriate and meeting the requirements of the Franchising Code of Conduct,” they said.
“Domino’s apologises to our franchisees for this honest mistake, and will ensure an annual audit report and financial statement are distributed to franchisees as required by the Code each year going forward.”
Last August, Domino’s Pizza reported full year network sales up 32.7% to $1.964 billion and underlying profit after tax ahead of guidance at $92 million, a 43.6% rise and a record.