What franchisors can learn from the latest advertising law proceedings
Most franchisors understand that advertising must be truthful. However, many do not appreciate how aggressively the ACCC is currently scrutinising marketing campaigns, particularly those involving environmental claims, charitable donations, social responsibility initiatives and promotional offers.
The ACCC’s recent proceedings against Grill’d provide a timely reminder that consumer law is concerned not only with what businesses say, but also the overall impression their advertising creates.
The ACCC alleges that Grill’d represented to consumers that $1 from every burger purchased on a Tuesday would be donated towards tree planting initiatives as part of its “Tree Day Tuesday” campaign. The ACCC alleges that only a much smaller proportion of purchases actually qualified for the donation due to conditions and limitations that were not adequately disclosed to consumers. While the proceedings remain before the Court and the allegations are yet to be determined, they highlight an increasingly important compliance issue for franchise networks: good intentions are not enough if the marketing message creates a misleading impression.
The Foundation: Section 18 of the Australian Consumer Law
The starting point is section 18 of the Australian Consumer Law (ACL), which prohibits conduct that is misleading or deceptive, or likely to mislead or deceive.
Importantly, a business does not need to tell an outright lie to breach section 18.
A representation may be technically accurate and still be misleading if consumers are likely to take away the wrong impression. Courts regularly assess advertising by looking at the overall impression created, rather than undertaking a detailed analysis of every word or qualification.
This is particularly important in franchise systems, where consumers may encounter a promotion through social media, paid advertising, websites, loyalty programs, in-store signage and local area marketing campaigns. A disclaimer hidden in fine print will not necessarily cure an otherwise misleading headline claim.
The question is not:
“Can we technically justify the wording?”
The question is:
“What would an ordinary consumer reasonably understand from the advertisement?”
Fine Print is Not a Magic Wand
One of the most common misconceptions we see is the belief that terms and conditions can solve any advertising problem.
Unfortunately, that is not how the law works.
If the dominant message is misleading, buried qualifications may not assist. Material conditions should be disclosed prominently and at the point the consumer receives the key message.
For franchisors, this becomes particularly important when rolling out national promotions. It is not uncommon for head office to develop a campaign which is legally reviewed in one format, only for key qualifications to disappear when the campaign is adapted into social media graphics, local area marketing material or point-of-sale advertising.
Consistency matters.
Section 29: False or Misleading Representations
Section 29 of the ACL contains a number of specific prohibitions relating to false or misleading representations about goods and services.
The provision captures representations concerning:
- quality, value or performance;
- sponsorships and affiliations;
- endorsements and testimonials;
- pricing;
- benefits and characteristics of products and services; and
- approval, accreditation or qualifications.
For franchisors, this can create risk in a surprisingly broad range of situations.
Examples we regularly encounter include:
“Australia’s No. 1” claims
Can the claim be objectively substantiated? Number one by what metric? Sales? Locations? Customer satisfaction?
Testimonials and reviews
Has the review been edited? Is it genuine? Is it still representative of the current customer experience?
Before-and-after results
Particularly in health, beauty, fitness and wellness franchises, businesses often make performance claims that cannot be substantiated across the customer base.
Training and accreditation claims
If franchisees or staff are marketed as “certified”, “qualified” or “industry accredited”, the underlying credentials should be carefully verified.
Pricing representations
Promotions involving discounts, bundles or savings claims should be carefully checked to ensure the comparison pricing is genuine.
Greenwashing Remains an ACCC Priority
The ACCC has repeatedly identified environmental and sustainability claims as an enforcement priority.
Many franchisors are understandably keen to promote environmentally conscious initiatives. However, terms such as:
- sustainable;
- environmentally friendly;
- eco-conscious;
- carbon neutral;
- ethical;
- green; and
- net zero
can create significant legal risk if they are not capable of substantiation.
The Grill’d proceedings are particularly interesting because they demonstrate that ACCC scrutiny is not limited to environmental claims about products themselves. Claims concerning charitable donations, social impact initiatives and sustainability programs are equally capable of attracting regulatory attention.
If consumers are influenced by a representation about environmental or social outcomes, the ACCC expects that representation to be accurate, verifiable and appropriately qualified.
Promotional Campaigns and Bait Advertising
Franchisors should also be conscious of section 35 of the ACL, which prohibits bait advertising.
In simple terms, businesses must not advertise products or services at a specified price where they do not have reasonable grounds to believe they can supply those products in reasonable quantities.
For franchise networks, this issue commonly arises where:
- a national promotion is launched without adequate stock levels;
- heavily discounted products sell out almost immediately;
- franchisees are unable to access inventory required to honour the promotion;
- promotional pricing is advertised nationally but unavailable at many locations; or
- demand materially exceeds operational capacity.
A successful marketing campaign can quickly become a compliance issue if the network is not operationally prepared to deliver on the promise being made.
Why Franchisors Need Legal Input Early
One of the most common mistakes we see is treating legal review as the final step before a campaign goes live.
In reality, legal input is most valuable much earlier in the process.
A lawyer experienced in franchising and consumer law can assist with:
- identifying problematic claims before significant marketing expenditure is incurred;
- reviewing promotional mechanics and eligibility criteria;
- ensuring terms and conditions align with the headline messaging;
- assessing environmental and sustainability claims;
- reviewing supplier representations before they are incorporated into network advertising;
- identifying franchise-specific compliance risks; and
- reducing the risk of franchisees adapting campaigns in a way that creates unintended liability.
Importantly, advertising compliance is not simply a head office issue. Franchisors should also consider whether their franchise agreements, operations manuals and local area marketing policies contain appropriate approval mechanisms and advertising controls.
Practical Checklist for Franchisors
Before launching your next campaign, consider:
✓ What is the overall impression created by the advertisement?
✓ Could a consumer take away a misleading message, even if the words are technically accurate?
✓ Are all material qualifications clearly visible and prominently disclosed?
✓ Can every factual claim be substantiated with evidence?
✓ Have any environmental, sustainability or charitable claims been independently verified?
✓ Are testimonials, endorsements and reviews genuine and current?
✓ Is sufficient stock available across the network to support the promotion?
✓ Have franchisees been provided with clear guidance regarding approved advertising?
✓ Have supplier claims been independently verified before being repeated in marketing materials?
✓ Has the campaign been reviewed from a consumer law perspective before launch?
The ACCC’s proceedings against Grill’d are a useful reminder that advertising compliance is no longer limited to obvious false statements. The regulator is increasingly focused on overall impressions, environmental claims, charitable initiatives and promotional transparency.
For franchisors, the safest approach remains the simplest: say what you mean, disclose any material limitations clearly, and ensure the campaign delivers exactly what consumers are being led to expect.
Because in the current regulatory environment, getting the marketing right is not just good brand management — it is good risk management.