Australian food-delivery giant Menulog is creating websites for small restaurants and cafes by default, at times without their knowledge, and laying claim to the domain names.
This is causing headaches for small-business owners wanting to set up their own websites, finding the domain name for their business has already been taken by Menulog, which states in some versions of its restaurant agreement that it isn’t required to relinquish the domain and withholds rights to use it “as it sees fit”.
In just 20 minutes of searching, SmartCompany found numerous examples of the practice, with a significant number of businesses in Melbourne’s outer suburbs having websites set up for them by Menulog by default when they sign up to the site.
In cases where small-businesses already have their own official sites, some of these websites can rank higher in Google search results.
What will the election mean to you?
Sign up to our free newsletter, including this weekend’s coverage of the election.
The domains all follow a similar format, usually just being the business’ trading name. For example, a business called Steve’s Milkbar would have the domain ‘www.stevesmilkbar.com.au’ registered by Menulog, if available.
The website houses all the relevant details for the restaurant, along with a description, and a menu customers can order from through Menulog. Whois examination of these domains reveals they are owned by either Menulog Pty Ltd or Menulog subsidiary Eatnow.
Practice is hindering SMEs
Speaking to SmartCompany, IT consultant Jessica Reesby said she became aware of the issue after trying to set up a website for a small restaurant client.
“They’re a couple of business owners from overseas, not very technical people, and they engaged us to work on their marketing and build an online site after they had some success selling through UberEats and Menulog,” she says.
“I went to buy the domain name which was the exact name of their business, and straight away I could see it was already taken.”
After doing some digging, Reesby found Menulog was the owner of the domain, which she said “shocked” her.
In a statement, Menulog managing director Alistair Venn disputed the claims, saying Menulog does not automatically purchase domain names for restaurants, and instead offers a templated website for restaurants if they do not already have an existing site.
“This service is offered free of charge and is in no way mandatory and is not a default opt-in,” Venn says.
However, numerous different restaurant agreements seen by SmartCompany dispute this claim, with the agreements stating Menulog may at any time create a website for the business. The clauses relating to the website creation do not appear to be opt-in and are instead baked into the standard restaurant agreement.
Additionally, businesses contacted by SmartCompany have said they were unaware of the Menulog website’s existence until recently, despite having been signed onto the platform for years.
In some cases, Menulog has bought the business’ domain name but has not set up a website for the company.
A restaurant agreement seen by SmartCompany stipulates Menulog may create a website for the business at any time unless the business requests otherwise in writing.
Menulog is then permitted to use the business’ name, menu and logo, along with any other intellectual property provided, on the website, however, all other IP on the website remains the property of Menulog.
At the request of the business, or at “any time and for any reason”, Menulog will permanently remove or otherwise disable the website. However, it appears in such cases, Menulog retains ownership of the domain name, and retains the right to re-use it for “other purposes as it sees fit”.
However, according to Venn, restaurants on the platform have the option to have the domain transferred into their name, and the company processes “many hundreds” of websites a year through this method. Reesby says she has since instructed her clients to contact Menulog to retrieve their domain names from the business.
This domain transferral method does not feature in the Menulog restaurant agreement, however. Two separate agreements seen by SmartCompany, each signed within the last two years, did not mention any method for transferral of domain name.
In one agreement, Menulog stipulates the website “shall remain the property of [Menulog] at all times”.
“Menulog has always had detailed legal and operational frameworks that have allowed the transfer of ownership of domains to restaurants,” a company spokesperson told SmartCompany.
“This is still the case and any restaurant that would like to have a Menulog-owned domain transferred into their name is welcome to contact us at any time and have this swiftly actioned.”
The company also specifies newer versions of the restaurant agreement contain different language around the website creation and retention terms.
A potential breach of rules
Speaking to SmartCompany, director at Viridian Lawyers Richard Prangell says this action strikes him as an “overreach” by Menulog.
“I’ve worked with a lot of businesses who operate services platforms, and I’ve never seen anything quite like this clause before,” he says.
“To my eyes, I think there’s a good argument that they are in breach of auDA’s rules for registration of domain names.”
Australia’s .au Domain Administration regulator (auDA) enforces a set of rules about who may or may not register .au domain names. It stipulates the domains must either be “an exact match, abbreviation or acronym of the registrant’s name or trademark” or otherwise “closely and substantially connected to the registrant”.
auDA’s guidelines for what registrars should consider as ‘close or substantially’ connected are broad, however, and include services, activities, events or products the registrant provides or operates.
“Intellectual property protection is a serious issue for many small businesses. Usually, the threat comes from overly aggressive competitors, but as Menulog shows, even business partners can be a risk,” Prangell says.
“I would strongly encourage all business owners to take proactive steps to protect their brands, rather than try to claw them back when it’s too late.”
* This article was updated at 6pm, June 14.