Report 74 Business Practices Committee

The Committee receives many complaints from franchisees against franchisors. Often the goodwill, products and services, marketing procedures, expertise, systems and support facilities of the "franchisor" are nonexistent. Many consumers are apparently of the opinion that when they buy any "franchise", they are assured of success and financial freedom. These franchises often fail and result in financial hardship.

It should not be overlooked that consumers also have a part to play. They must become fully conversant with their rights and obligations as they am set out in any relevant contract and should obtain legal advice before entering into franchise contracts.

The Committee afforded Kilian many opportunities to provide evidence that his promises could materialise. He could not provide such evidence. Kilian could not even prove that he had the exclusive rights to any product. He mislead franchisees by selling rights that he did not have. He also sold the "rights" of one area to more than one "franchisee"

Simply Bellissimo's accounting records and financial affairs were in complete disarray. The total absence of an operational accounting system and commingling of the affairs and funds of Simply Bellissimo and Kilian and Ms Kilian meant that the management of Simply Bellissimo had no means of understanding and appreciating the financial state of the firm. These factors were prejudicial to all the "franchisees"

Whether by design or accident, the business practices of Kilian and Ms Kilian, trading as Simply Bellissimo, constitute harmful business practices. There are no grounds justifying the practices in the public interest.