Domino’s fined for failing to inform franchisees about marketing pool spend
Pizza giant Domino’s has become the first company in Australia to be fined for not complying with the Franchising Code of Conduct after failing to detail how $40m in marketing pool funding was being spent.
The action, launched by the Australian Competition and Consumer Commission, saw the fast food company fined a total of $18,000 for the breach, but the company has described the failure as “an honest mistake”.
Companies which require franchisees to pay into a marketing pool must prepare annual statements for franchisees detailing how the money is being spent.
The fine comes 15 months after the code was changed to allow court imposed penalties for non-compliance and ACCC deputy chair Michael Schaper said it was the first time a company had been fined for not giving franchisees a breakdown of marketing spending.
“Marketing fund contributions are often a significant expense and franchisors need to provide timely and accurate disclosure of the fund’s activities,” Schaper said.
“Ensuring small businesses receive the protection of industry codes is an enforcement priority for the ACCC.”
A spokesperson for Domino’s said the company has since had its accounts audited and all expenditure was appropriate and met the requirements of the code.
“However we accept we did not provide a copy of this audit report on time to our franchisees, or the required financial statements in previous years – this was an oversight,” the spokesperson 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. ”
