Why franchisees need to get advice about a notice of breach

By Sarah Stowe | 29 Oct 2015 View comments

A recent decision by the Supreme Court of Queensland shows a franchisee does not need to be intimidated by a Notice of Breach that may set in motion a process that ends in the loss of a valuable business without compensation.

A franchisee may have a range of arguable defences that allows an injunction to stop any attempt by the franchisor to end the franchise until the matter can be looked at and determined by the Court. 

In the National Security Training Academy (GC) Pty Ltd v National Security Training Academy Pty Ltd case, the expensive legal proceedings ended with the Court finding in favour of the franchisee, declaring that the Franchise Agreement between the franchisor and the franchisee had not been lawfully terminated.

This case stresses the importance of franchisees not reacting passively to receipt of a breach notice but being proactive and obtaining relevant legal advice as quickly as possible to ascertain what steps they can take to avoid termination of the franchise agreement and loss of the business.