Automotive servicing firm Ultra Tune has been accused of breaching court orders after it was hit with a $2 million penalty for misleading a potential franchisee and trying to cover it up.
Ultra Tune allegedly failed to implement a compliance program and breached the Franchising Code despite the Full Federal Court imposing the penalty in September 2019.
The Australian Competition and Consumer Commission announced the case on Tuesday, alleging that Ultra Tune was in breach of orders imposed by the court to remain compliant.
"We allege that Ultra Tune disregarded its obligations under the Franchising Code, which are designed to provide transparency to franchisees," ACCC Commissioner Liza Carver said.
In January 2019, the Federal Court found Ultra Tune misled a prospective franchisee about the price of the franchise, its age and the ongoing rent.
Ultra Tune was hit with a $2.6 million penalty after Justice Robert Bromwich found the firm had attempted to misled the court about what had transpired.
"The cover up that Ultra Tune attempted reflects a significantly heightened need for deterrence, in relation to conduct that was already a most serious and fundamental breach of the Franchising Code in taking the deposit in the first place, reflecting as it does Ultra Tune's attitude in relation to its contravening conduct," the judge said.
The penalty was reduced to just over $2 million after an appeal to the Full Court.
Under the compliance program ordered by the court, Ultra Tune was required to ensure there were no further breaches of the Franchising Code or the Australian Consumer Law.
This did not occur, the consumer watchdog alleges.
"The ACCC will pursue contempt of court action when it considers Court orders, including those obtained for the protection of franchisees, have been breached," Ms Carver said.
Ultra Tune has been contacted for comment.
