T Maddocks Lawyers 140 William Street Contact Greg Hipwell Melbourne Victoria 3000 Australia Direct 0392583354 Email greg.hipwell@r 3u Telephone 61 3 9258 3555 Our Ref GHH: 6720268 Facsimile 61 3 9258 3666 [email protected]www. mad docks. com . au 28 April 2016 DX 259 Melbourne Attention: The General Manager Adjudication Branch Australian Competition and Consumer Commission GPO Box 3131 Canberra ACT 2601 Dear Sir/Madam Exclusive dealing notification — LCA Franchising Pty Limited Please find enclosed: 1 . Form G — Notification of Exclusive Dealing from LCA Franchising Pty Limited; and 2. Cheque in the amount of $100 for the lodgement fee. If you have any queries, please do not hesitate to contact me. Yours faithfully Gr ip e I Pa r En [6720268:16296077_1] ri
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
T Maddocks
Lawyers 140 William Street
ContactGreg Hipwell Melbourne Victoria 3000 Australia Direct0392583354 Emailgreg.hipwell@r 3u
1 .Form G — Notification of Exclusive Dealing from LCA Franchising Pty Limited; and
2.Cheque in the amount of $100 for the lodgement fee.
If you have any queries, please do not hesitate to contact me.
Yours faithfully
Grip e I Par
En
[6720268:16296077_1]
ri
thorn
Typewritten Text
Form G Commonwealth of Australia
Competition and Consumer Act 20 10 — subsection 93 (1) NOTIFICATION OF EXCLUSIVE DEALING
To the Australian Competition and Consumer Commission:
Notice is hereby given, in accordance with subsection 93 (1) of the Competition and Consumer Act 2010, of particulars of conduct or of proposed conduct of a kind referred to subsections 47 (2), (3), (4), (5), (6), (7), (8) or (9) of that Act in which the person giving notice engages or proposes to engage.
PLEASE FOLLOW DIRECTIONS ON BACK OF THIS FORM
Applicant
(a) Name of person giving notice: (Refer to direction 2)
LCA Franchising Pty Limited ACN 150 499 595 (LCA)
(b) Short description of business carried on by that person: (Refer to direction 3)
LCA is the franchisor of a network of franchisees (Franchisees) that operate "Laser Clinics Australia" businesses in Australia (Clinics). The Clinics provide laser hair removal, cosmetic injections, skin treatment services and skin product sales under the Laser Clinics Australia brand and using LCA's business system.
As part of the operating model of the LCA network, LCA Operations Pty Ltd ACN 600 736 212 (LCA Operations), a related body corporate of LCA, has a shareholding interest of no less than 50% in each Franchisee entity. This model is designed to promote alignment of interest between the Franchisee and the LCA group, and allows for certain capital investments required by a Franchisee to be borne in shareholding proportion. As a result of this model, LCA has a direct interest in ensuring that Franchisees are able to obtain quality goods and services at a competitive price and LCA Operations is involved in all buying decisions of Franchisees.
Franchisees operate the Clinic pursuant to a franchise agreement with LCA (Franchise Agreement). Pursuant to the Franchise Agreement, each Franchisee will be granted the right to operate a Clinic using the "Laser Clinics Australia" brand and associated intellectual property, subject to the terms of the Franchise Agreement.
At present, there are 61 Franchisees operating Clinics in New South Wales, Victoria, Queensland, South Australian and the Australian Capital Territory. As the date of this notification, there is currently 1 un-franchised Clinic which is operated by associates of the Franchisor.
(c) Address in Australia for service of documents on that person:
Unit 31, 6-8 Herbert Street, St Leonards NSW 2065.
[6720268:16155496_2] Page I of 8
thorn
Typewritten Text
thorn
Typewritten Text
N99082
8 J 0 Z 1̂2b'dIZM799^91 :i39ZOZL9)
-seesiqoueij
(g uQIjOej.IP ol Jejea)
:sajejej 4onpuoo 844 4014m 01 suosied lo sesselo jo sselo(e)
4onpuoo POIJIlOu 044 Aq pepe:ge aq ol A19)j!j jo pepejje Isuosied lo sOsselO JO'SuOSJOd
:Ionpuot) posodoid jo lonpuoo e4j lo uoildliosea(q)
-(siailddnS POleulwON) VO-1 Aq paipads siailddns jo Vol wojj'(sailddnS PGAojddV'Aj9AIjO9jjOO)
'sbuipq pue sajnlxil pue slonpoid pue sailddns leoipew pue salqewnsuoo oiuilo'SGOIAJOS 6UIUlejl leinpeooid 'S931AJOS GOUeUE)JUIeW juawdinbaseqons'OIUIIOGqIJOIS901AJ9Spuesionpoid'luawdinbc)jc)qlo (AI)
pue laiempjeq pue ejemllos jaqlo pue ejemllos bui^ooq pue ales-lo-juiod (!!A)
'sleiialew builemiew
pue obeubis buipnloui 'esipueqojaw pue Aieuoilels eilejlsnV solullo J9Se-j (!A)
'slonpoid p9puejq,,jnj!jsui^S,,(A)
'juawdinbe pue salqejoefu! oilawsoo (AI)
'sionpoid leoilneoewsoo NO
'slonpoid ajeoui^s 0)
'Aieuipew pue juawdinbe jasel 0)
:6uisijdwoo 'VO-1 Aq 'p9jeUIWOU JO PGAoidde aq Aew qoiqm jo'pajeuipou io p9Aoidde
S901AJOS PUe SPOO5 lo seasiqouejj Aq uoij!sinboa aql ol selelai uoijeoiplou siqi
:se4elej 0314ou sit4i t4314M 10
uoij!sinboe jo Aiddns aLil ol uoilelai ui saoiAies jo spooB etp lo uoildijosea
(e)
IUGWOBUBJJe POUPONz
(b)Number of those persons: (Refer to direction 6)
(i) At present time: there are currently 61 Franchisees operating in the LCA franchise network and each Franchisee operates 1 Clinic.
(ii) Estimated within the next year: LCA estimates that it will have 80 Franchisees operating in the LCA franchise network within the next year.
(c)Where number of persons stated in item 3 (b) (i) is less than 50, their names and addresses:
Not applicable, there are more than 50 Franchisees.
4.Public benefit claims
(a) Arguments in support of notification: (Refer to direction 7)
Refer to paragraph 4(b).
(b) Facts and evidence relied upon in support of these claims:
The purpose of the notified conduct is not to substantially lessen competition in any market. Rather, the notified conduct will enhance the capacity of Franchisees and provide significant benefit to consumers, as set out below.
The laser hair removal and cosmetic injection industry can provide significant barriers for entry primarily because of the high establishment costs. The notified conduct allows Franchisees, as small businesses, to enjoy the benefits of pricing arrangements with suppliers that may otherwise not be available to them as independent small businesses. By enabling more laser hair removal and cosmetic injection businesses to enter the market, the notified conduct encourages competition among these businesses, increasing availability and quality of these services for consumers and driving down prices. The involvement of LCA Operations in the Franchisee promotes entry into the market by sharing the capital investment required at the outset in proportion to its shareholding.
Competitive price
LCA invests significant time and effort in its supplier relationships and by doing so will ensure that the prices and supply terms it negotiates with Nominated Suppliers constitute fair value for Franchisees. The involvement of LCA Operations in the Franchisee further incentivises LCA to negotiate competitive pricing arrangements with its suppliers and the interests of the LCA group and Franchisees are more closely aligned than they otherwise would be under a traditional franchise model. In LCA's opinion, the prices that LCA can negotiate with Nominated Suppliers will on average be significantly less than Franchisees could obtain independently over any significant period. This is due to the volume of supply that a nominated supply chain provides.
When selecting Nominated Suppliers, LCA will consider a range of factors such as: product consistency, product pricing model, product quality, regulatory compliance, safety, logistical viability, references from other customers and ability to provide uninterrupted supply.
piepuels lseqbiq aql ol ioj paplAoid pue passaippe Buiaq Allenulpoo si Alejes
jewolsno pue joleiedo ;eql pailsiles eq pue abeuew ol elqe aq ll!m VO-1
'siewnsuoo Aq paloadxe spiepuels aql ql!m
leaw leql pue ales gie qoiqm Al!lenb jualsisuoo e lo saoiAies pue slonpoid
ql!M p9p!Aoid aie siewnsuoo leL41 ainsue ol elqe aq ll!AA Vol
^jomjau jailddns P9119A pue alqeilej e 6uiqsilqelsa AE]
-siewolsno Aq PGAIOOOJ JO paiinboe
aie qoi qm saoi/uas pue slon poid asnoq lo luoil, astid woo sai Idd nS PeAoiddV eql
lo Alpofew eqi -siewolsno lo Aleles eql pue soiullo 10 ss000ns aql ol eoueliodwi
leollpo lo AisnolAqo si Al!lenb aoi/uas pue lonPOJd 'NJONGu aL41 ol pailddns sailddns PaAoiddV lo Al!lenb aql joiluoo pue jopow ol VO-1 smolle lonpuoo peij!lou aqi
95uepyuo5 jgwnsuoo paseajou! pUe Apenb 55.1Ajes pue lonpoid
-siewolsno ol saoi/uas Al!lenb 9P!Aoid ol elqe aq ll!M A9L4j:POjLUO3 bUlAeq 9WIl
awes aql le lsl!qm siewnsuoo ol seoijd 9Aij!j9dwoo ajow pue jamol j9.4o ujnl ui
pue 'sesseuisnq glqelgoid ajow aleiedo ol alqe aq ll!m saasiqouejj 'S6UlAes
leu011ejado uielqo ol Al!unlioddo pue Aouaioi,49 sit4l lo eouenbasuoo e sV
at4l lo lied se pue 'siql op ol sdiqsuoilelai sseuisnq pue asi:padxa Aiessaoau
GLIJ Seq VO-1 'JE)P!AOJd lUeAGIGJ Gql JO sleiluepajo at4l jo sionpoid pue seoi/uas
'Iuewdinbe siql aoinos ol ejeqm mou^ ol Ajlsnpui at4l ui eoueijedxe Inoql!m
uosied e jol 11noiMp aq ueo 11 -posileioads Alqbiq aie ssauisnq uoiloalui. oilowsoo
PUe JeAOLU9J Jleq JGSel e joj peiinbei sionpoid pUe S901AJ,9S 'juawdinbe aqi
ADUG^10.1,ya ss,9u.1sng
-soiuilojieqljoAl!l!qel!jojdaqlasiwixew (Al)
pue -siewolsno jol eles sie sailddnS P9AojddV eql leql elqeljojwoo eq (!!!)
'aoi/ues lo Al!lenb q5iq e GAIGOBJ siewolsno ainsua 0)
'siewolsno jiE)qj ol Aauow jol E)nleA 9P!Aoid
:Ueo saasiqouei-i
'SOJeJ GAij!jadwoo le sE)ilddnS P,9AojddV aiinboe ol seesiqouejj 6uilqeue Ag
(iii) LCA will be able to manage the price of key inventory and the cost of providing services which in turn enables Franchisees to more easily provide, or to provide enhanced, value for money to customers;
(iv) customers will be able to have confidence that whenever they visit a Clinic, they will be supplied with the same high standard of service and quality products; and
(v) Franchisees will purchase Approved Supplies in the knowledge that the ability of the Nominated Supplier to provide products and services to the standard required by LCA has been investigated by LCA.
Protection of the Laser Clinics Australia brand and system
Since the establishment of the first Laser Clinics Australia branded clinic in 2008, owners and associates of LCA and LCA have invested significant resources in developing a sustainable business model. A key component of the success of this model has been the reputation developed in the "Laser Clinics Australia" brand as an indicator of quality services and products that represent quality, safety and value for money.
LCA has been able to achieve the above by:
(i) managing the pricing structure within its supply chain;
(ii) controlling and monitoring the quality of key equipment, services and products supplied to Clinics; and
(iii) working with suppliers and service providers to ensure equipment, services and products supplied to Clinics appropriately cater for the needs of customers at the Clinics.
These measures are aimed at protecting the integrity and distinctiveness of the Laser Clinics Australia brand and ensuring customers are provided with a safe and quality service. These measures also maintain the value in, and reputation of, the Laser Clinics Australia business, which will enable Franchisees to attract customers.
The views of LCA expressed above are supported by the ACCC's 2011 Addendum to its 2007 Guide to Exclusive Dealing which states that:
The A CCC is of the view that restrictive supply arrangements that require franchisees to purchase goods or services from particular suppliers are often central to the operation of a franchise network. These arrangements enable the franchisor to maintain quality and consistency in each of the franchise outlets that is often important in marketing the franchise network and promoting a standard customer experience. In addition, the use of preferred or nominated suppliers may result in efficiencies and cost savings that will potentially be passed on to the franchisees and ultimately consumers.
(6720268:16155496_21 Page 5 of 8
8JO 9 30ud
1Z_96t199L9t :99ZOZL9]
-aoijd 9Aij!j9dwoo e le saoiAies pue slonpoid
Aj!Ienb uielqo ol alqe aie soiuilo eql ainsue 01 19A91 jojejado ue pue josiqouejj e
qloq le paSIAIJU90UI si dnoib vo-1 aql os easiqoueij qoea Ul isgialui diqsjaumo ue
seq 'VO-1 10 aieioosse ue 'suoileiedo Vol 'BAoqe pajou sV -Alddns lo Aj!Ienb pue
Alains pue Aleles 'seoijd 9Aipjadwoo ajow lo Al!l!qel!eAe 9ql 6uipnloui 'jonpuoo eql
wojj 6uimoU sl!jauaq aql Aq paq6iamlno aq II!m luewijlap t4ons Aue 'J9AO9JO"