New contracts increase owners’ power.
The founders of Mr Rental, Glen and Kerrianne Hickman are taking six of their former franchisees to court. They are attempting to win back business assets as well as the right to take over their leased premises and enforce restraint of trade orders. The company has 69 stores nationally.
However, the franchisees are fighting back and have lodged their own cross-claim seeking damages. They say that the Hickman’s have breached their franchise agreements and accuse them of unconscionable conduct.
The franchisees are from Gosford, Coffs Harbour, Nowra and Tamworth in NSW, Dandenong in Victoria and Derwent Park in Tasmania. They claim the franchisor denied them access to updated systems, new marketing, training, logos and branding that was offered to other franchisees.
When the Hickman’s presented the franchisees with a new agreement that centralised the business model, the six franchisees baulked and the court action ensued.
The new agreements followed statutory changes that required rental companies operating on fixed term agreements with their customers to obtain Australian credit licences.
However, according to media reports, the franchisees are claiming that the new contracts are designed to increase the Hickman’s cashflow and reduce the power of the franchisees.
The new contracts also follow an enforceable undertaking by the Australian Securities and Investments (ASIC) in 2013 to refund 1560 consumers more than $300,000 because of unfair contract terms in rental agreements the franchise developed after the legislation was introduced.
However, the Hickman’s are claiming the former franchisees have established or taken steps to setup competing businesses at their Mr Rental locations.