Franchise Contract stability- the effect of “Ketchell’s case”
by
DCS Lawyers
In February 2000, a franchisee (Ms Jean Ketchell), was provided with franchise documents for execution. When returning the documents to the franchisor, the franchisee did not provide the franchisor with the written statement confirming they had received, read and understood the documents, as is required by the Franchising Code of Conduct.
The franchisee sought to rely on this omission to avoid paying ongoing to the franchisor by claiming there had been a breach of the Code. When the matter was heard before the NSW Court of Appeal it was decided that a breach of the Code rendered the franchise agreement illegal. This decision created a significant grey area in franchise law and the potential for both franchisors and franchisees to seek to terminate an agreement based on a technical breach of the Code.
The recent High Court decision examined various factors including the franchisee’s position, the fact that the franchisee received adequate legal advice prior to entering into the agreement and the overall effect of the alleged breach. The decision not only overturns the Court of Appeal’s ruling but also restores the stability of franchise agreements in so far as a breach of the Code now does not necessarily bring a franchise agreement to an end.
The Ketchell decision has finally provided franchisors with a more definitive understanding of the circumstances in which a franchise agreement will be upheld by Australian Courts.
DC Strategy is the region’s premier franchising specialist with an experienced and respected team of specialist franchise consultants and specialist franchise solicitors. As market leader our extensive practical experience ensures our clients have access to the latest franchising know how, outcomes, trends and developments to grow a better and more valuable business.
18.09.2008
FCA Member
DCS Lawyers News
Paul Kean joins DC Strategy Legal to provide specialist franchise advice
14/03/2011 - DC Strategy Legal is pleased to announce the appointment of ...
Is a franchisor obligated to renew a lease prior to the completion of a sale of an existing franchise?
18/09/2008 - In a recent DC Strategy case, the question as to how soon a ...
Targeting the masses – clever marketing or just spam?
27/08/2008 - As electronic marketing increasingly supersedes traditional ...
Recent Developments in NSW Real Estate law
27/08/2008 - The Office of Fair Trading NSW (OFT) recently released a report ...
Using your IP rights
6/08/2008 - Businesses face losing rights to critical intellectual property ...
Keeping the Balance in Franchising Law
5/08/2008 - No one wants to be caught up in expensive and time consuming ...
Contact DCS Lawyers
International Head Office
Level 5, 530 Collins Street
Melbourne
VIC 3000
Tel: 03 8102 9200
Fax: 03 8615 7298
