The ACCC is taking franchisor Jump! Swim Schools to court, alleging it misled over 90 franchisees by failing to deliver their fit-outs, leaving them hundreds of thousands of dollars out of pocket.
In just the latest case of alleged franchisee exploitation to hit the scandal-plagued franchise sector, the ACCC will allege Jump! and director Ian Campbell made a series of false, misleading or deceptive statements in breach of Australian Consumer Law.
The competition and consumer watchdog has been investigating the company in the wake of reporting by the Sydney Morning Herald and The Age, which earlier this year published allegations Jump! accepted fees to construct pools for franchisees, but left them hanging.
On Tuesday the ACCC claimed over 90 franchisees had not received an operational swim school within 12 months of handing over between $150,000 and $175,000 in fees, while some are still waiting.
“We allege this conduct caused substantial harm to franchisees who paid significant sums but did not receive an operational swim school within the time specified, or at all,” ACCC chair Mick Keogh said of the case.
News of the prosecution comes less than two months after the main trading company behind Jump Swim collapsed into voluntary administration, although existing franchisees are still trading.
Jump Swim director Ian Campbell, who was awarded “Australian emerging franchisor of the year” by the oft-criticised Franchise Council of Australia (FCA) in 2016, is also being prosecuted.
Campbell denies the ACCC allegations and says he will contest the claims in court.
Citing a slowdown in the swim school site approval process in recent years, Campbell argues delays experienced by franchisees are the result of red tape challenges.
“Our position with that is there is a number of factors and approvals required. We’re not opening a local corner shop, we need approvals from a whole range of bodies,” he says.
However, the ACCC alleges Campbell had no reasonable basis for telling franchisees their swim schools would be operational within twelve months, arguing he “wrongfully accepted payment”.
In its statement of claim sent to the Federal Court yesterday, the ACCC said it had three versions of a brochure allegedly sent to prospective franchisees, claiming those who bought in would be provided with an operational franchise within 12 months.
“Jump Swim continued to accept payments when it knew, or ought to have known at the time it accepted the payments, that the timing for its delivery of operational franchises was dependent on events that were outside its control,” Keogh said.
Campbell denies this.
“We don’t believe we did promise people a 12-month time frame or represent that, we believe we have a range of supporting materials,” he says.
The ACCC alleges 88 franchises were left waiting for longer than 12 months, experiencing an average wait time of 540 days, and in some cases longer than three years.