They say legislation is like sausages – the closer you get to seeing how it is made, the less respect you have for the finished product. On the flip side you have the oft-criticised legal system. Yet the High Court deliberations in
Masters of Education Services v Ketchell demonstrate that the courts can ultimately be trusted to deliver common sense decisions in tune with the requirements of the community.
The current Federal inquiry into franchising has received over 100 submissions. Not one submission identifies any endemic problem in franchising, yet further legislative change is at short odds. And the area of greatest focus – “good faith”.
Here is our hot tip – the Federal inquiry will recommend the inclusion of a statutory duty of good faith and fair dealing into the Franchising Code of Conduct. And if such a recommendation were implemented, a new wave of contractual uncertainty will sweep the sector, probably lasting until a court determined that the duty was much more limited than those championing it as the cure for all ills would have us currently believe.
The Franchise Council of Australia has asked franchisors to make submissions, and some have done so.
By Stephen Giles
Deacons is Australia's leading
franchise law firm, with offices in Melbourne, Sydney, Perth, Brisbane, Canberra and in 11 locations in Asia. We have assisted over 200 franchise companies, from large international corporations to start up franchisors. We do not handle franchisee matters.
2-Oct-2008