Legal

Cleaning franchise fined $500,000 for unconscionable conduct; Alphatise accounts leaked following collapse: Midday Roundup

Andrew Sadauskas /

Collapsed professional cleaning franchise Coverall Melbourne has been taken to the cleaners, with the Federal Court fining the company $500,000 for breaches of the Australian Consumer Law in relation to the company’s dealings with prospective franchisees.

The court found Coverall Melbourne, the trading entity of South East Melbourne Cleaning Pty Ltd, engaged in unconscionable conduct in its dealings with two prospective franchisees, making false or misleading representations, and contravening the Franchising Code of Conduct.

Justice Murphy also found Coverall Melbourne engaged in unconscionable conduct by failing to pay the franchisees for the work they had completed, yet continued to demand payment for the initial franchising fee.

The case was initiated by the ACCC in July 2014, with deputy chair Michael Schaper describing the decision as “important for all involved in the franchise industry”

“By imposing a penalty of $500,000, the court is seeking to deter other franchisors from engaging in similar conduct,” Shaper said.

“This is a clear message that franchise businesses must ensure they comply with their obligations under the Australian Consumer Law and Franchising Code of Conduct.”

Alphatise accounts leak following collapse

Documents and accounts from collapsed tech startup Alphatise have been leaked, showing the Rich Lister-backed shopping site has lost $3.2 million before tax off just $278,566 in revenue so far during the 2015 financial year.

The documents, published by Business Insider, show Alphatise spent $1.8 million during financial year 2015 on staff, $366,318 on public relations, $245,063 on investor induction and consultants, as well as $117,879 on travel and vehicles.

Last financial year, the company accumulated a net loss before tax of $1.071 million, with just $9211 in revenue.

Earlier this month, Alphatise, whose shareholders include Rich Lister and Western Australia-based technology entrepreneur Zhenya Tsvetnenko, appointed Deloitte as administrators.

The online shopping company made headlines in September last year for hijacking the Australian launch of Apple’s iPhone 6, with the company claiming at the time it was gearing up for international expansion.

Shares up on open

Aussie shares have traded slightly higher this morning, despite falls on Wall Street overnight.

But Tristan K’Nell, head of trading at Quay Equities, said in a statement a lack of local economic data releases is giving investors “little incentive” to push the index higher.

“Market turnover into lunch was average at $1.281 billion,” K’Nell said.

“We could be set to continue this flat trend into the afternoon session with limited economic news around the region. The only piece set for release is the China Westpac MNI Consumer Sentiment data but this is unlikely to be market moving.”

The S&P/ASX 200 benchmark was up 6.4 points to 5975.5 points at 11.57am AEDT. On Tuesday, the Dow Jones closed 104.9 points lower, down 0.58% to 18011.1 points. 

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Andrew Sadauskas

Andrew Sadauskas is a former journalist at SmartCompany and a former editor of TechCompany.

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