Franchisors Cheer High Court Ruling
Just as big retailers such as Coles and Woolies are being targeted by the Rudd Government to possibly rein in their power over smaller rivals, the High Court has delivered a decision to protect franchisors from aggrieved franchisees.
This might have saved many franchisors from litigation and even bankruptcy.
Recently the High Court was called in after the NSW Court of Appeal ruled in Ketchell v Master Education Services that a breach of the code could render a franchise contract invalid.
This case hinged on the failure of a franchisor to receive written confirmation that the franchisee had read and understood the disclosure documents.
This was seen more as a mistake of process rather than anything illegal.
If the High Court had found in favour of Ketchell, it was thought that unhappy franchisees could have used the decision to get out of their franchise contracts.
Franchise Council of Australia chairman John O’Brien hailed the decision as a return to contract stability for the $128 billion sector.
“This decision means we can return to confidence in the pivotal contract which underpins franchising across Australia and all over the world — the agreement between franchisor and franchisee about how they will conduct business to their mutual benefit,” he said.His words will not be well received by a struggling woman franchisee, who is pleading for contractual fairness from the most powerful woman in Australian business, Gail Kelly, CEO of Westpac. Read more.
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