‘Power imbalance’: Cash Converters, travel agents MTA cop business register fines

Two major players in Australia’s franchise business landscape have been fined over business record failings.

Cash Converters and travel agents MTA have been fined by the consumer watchdog over franchise registration failures.

Both franchisors paid $16,500 fines following infringement notices from the Australian Competition and Consumer Commission.

The consumer watchdog says failing to meet registration requirements causes a power imbalance.

MTA told NewsWire the fine was excessive for “an administrative oversight where we didn’t file an annual update to the online franchising register”.

“All prospective members received the current and correct disclosure documentation and no one was disadvantaged,” a spokesperson said.

MTA has almost 500 franchisees across Australia. Picture: NewsWire / Flavio Brancaleone

“Our view is that the penalty is disproportionate, we’d like to see the ACCC implement automated reminders so others don’t face this harsh penalty for a simple error.”

The ACCC argues the franchise registration scheme “help(s) address some of the problems caused by the power imbalance in the franchise relationship,” ACCC deputy chair Mick Keogh said.

“A franchisor’s failure to maintain up-to-date information on the register undermines transparency for prospective franchisees, and the reliability and integrity of the (Franchise Disclosure) Register.”

NewsWire has contacted Cash Converters for comment.

The federal Treasury oversees the Franchise Disclosure Register, which gives free information to anyone interested in a franchise operation.

The ACCC received a $7m funding boost earlier this year to crack down on registry compliance. The consumer watchdog says the database is an important protector for small businesses.

“The requirement for franchisors to maintain accurate and up-to-date public profiles on the register ensures prospective franchisees and other stakeholders have clear and accurate information to help them make informed business decisions, including whether to enter into a franchise agreement,” Mr Keogh said.

Perth-headquartered Cash Converters has about 74 franchisee-owned stores in Australia, and 79 shops are run by the corporation, the ACCC estimates.

MTA, based on the Gold Coast, has an estimated 488 franchisees across the country.