Franchisees go after hair chain over ‘misuse of $1.5m’
Furious Price Attack franchisees have taken the company to the consumer watchdog over claims it misused more than $1m held in a marketing fund.
About 38 franchisees have lodged a joint complaint with the Australian Competition and Consumer Commission against Brabus PA Franchising Pty Ltd - Price Attack's holding company.
Several franchisees told The Courier-Mail the complaint centres around the use of about $1.5m secured in fund and allocated for marketing use.
The franchisees, who declined to be named to protect their agreements, argues Price Attack has used cash from the fund for IT upgrades and conferences.
Franchisees paid 3 per cent of gross turnover into the marketing fund, which would accrue about $3m to $4m each year.
It is understood the franchisees commissioned an audit which prompted them to raise the ACCC complaint, however the content of the audit is not publicly available.
One franchisee said the company had failed to communicate or answer questions about the marketing expenditure.
Sales were on a steady decline prior to COVID-19 earlier this year, prompting serious concern among store holders.
"Franchisees weren't hopeful for their future," one said.
Price Attack spokeswoman Karyn Kelly said the company had not been contacted by the ACCC.
"Price Attack is satisfied it has honoured all obligations to its franchisees," she said.
"It is also satisfied that it enjoys a very good relationship with all franchisees who honour their obligations in the interests of maintaining the success of the franchise and the Price Attack brand, whether during COVID times or otherwise.
"Any suggestion to the contrary is entirely baseless."
On Friday, in response to The Courier-Mail's coverage Price Attack chief executive John Pascoe wrote to franchisees.
"We would like to assure you that as a company we have not been notified by the ACCC and we are currently talking to our external lawyers about the next steps," he stated.
"As you know, every year Price Attack commissions an independent auditor to conduct an annual financial audit as required by the Franchising Code of Conduct, a copy of which you receive.
He said the complaint by the franchisees was not based on that audit and came from a separate "uncompleted and, therefore, entirely inaccurate and unreliable report".
"...A small group of franchisees actually commissioned a separate audit by PKF Australia last year and decommissioned the audit before completion," he said.
"It is unfortunate that one or two franchisees have sought to use the media to achieve their own objectives in a way that has the potential to damage the Price Attack brand.
"Our job is to protect the brand so I want to reassure you we are not taking this lightly."