Australia's competition watchdog has cracked down on Ray White for "likely" breaches of national franchising laws.
It is alleged Ray White real estate ended a five-year agreement with one of its franchisees in Charleville, Queensland without giving the franchisee owner, Nick Edwards, adequate reason.
Following an investigation by the Australian Competition Consumer Commission (ACCC), Ray White has since acknowledged that it was likely to have contravened section 51AD of the Trade Practices Act 1974 because it did not tell Mr Edwards why it proposed to end the agreement, nor what was required to remedy any breach.
In addition to resolving the matter with Mr Edwards, Ray White has given a court-enforceable undertaking that it will set up a trade practices law compliance program, requiring senior staff to undertake practical training focused on requirements under the Franchising Code of Conduct.
"The Franchising Code of Conduct provides that, unless there are special circumstances, a franchisor cannot end a franchise agreement without advising the franchisee of any alleged breaches of the agreement and without providing the franchisee time to remedy any breaches," acting ACCC chairman Michael Schaper said.
The disciplinary action serves as a dire warning to other franchisors.
"It is not good enough for franchisors to disregard their obligations under the franchising code of conduct," Dr Schaper said.
"Franchisees such as Mr Edwards are entitled to the protection of the law and the ACCC will act to ensure that small businesses are not unfairly treated by large businesses."
After the ACCC became involved, Ray White began negotiations with Mr Edwards to settle the dispute.