Franchise system criticised

Press, 17 April 1982, Page 7

Franchise system criticised

A franchise system used by Fisher and Paykel has drawn criticism from the Consumers’ Institute. The institute has asked the Examiner of Commercial Practices to investigate. The company supplies refrigerators, freezers, washing machines, and clothes dryers to a network of stores which are prohibited, by an agreement with Fisher and Paykel, to sell competing brands. Fisher and Paykel also makes whiteware for the McAlpine Prestcold chain of stores under the brand-name, Prestcold. McAlpines also prohibits its franchised stores from stocking competing brands. The Consumers’ Institute holds that the clause in the agreement is contrary to the public interest.and restricts competition. “We stress that our concern about these restrictive clauses applies only to firms that dominate their markets,” said the director of the institute (Mr R. J. Smithies). He said that Fisher and Paykel had a monopoly in the manufacture of refrigerators and freezers and dominated the market in automatic washers and clothes dryers. “When such a dominant manufacturer prohibits retailers from stocking competing brands, new or small competitors are placed at a severe disadvantage,” said Mr Smithies.