We were invited to present at this year’s Franchising Council of Australia (FCA) Legal Symposium in Canberra across a range of different areas. One of our topics was the all important “Case Update” in which we had a speaking role. We decided to discuss just three court decisions which had been delivered since the last FCA conference in October in 2011. Click here to view our paper.
In summary, our paper discusses Little Images Pty Ltd v Fresh View Venture Pty Ltd  QSC 402 which provides a timely reminder to franchisors and franchisees of the need to obtain legal advice regarding compliance with franchise agreement obligations, termination of a franchise agreement, and the distinction between franchise agreement breaches going to the root of the contract and those which are non-essential or technical.
We also then discuss Murray Pest Management Pty Ltd v A&J Bilske Pty Ltd  NTSC 05 which is a rare franchising case for the Northern Territory. It considers issues such as goodwill and confidential information, restrictive covenants and the reasonableness of restraint of trade provisions. Interestingly, the case canvasses that there is scope to consider a franchisee’s development of its own goodwill, which has the potential to operate post-termination without competing with the franchisor’s goodwill.
Finally, the paper considers another recent decision of Pampered Paws Connection v Pets Paradise Franchising (Qld) Pty Ltd (No 10) 2012 FCA 25, which involved technical breaches of the Franchising Code, an action for misleading or deceptive conduct, third line forcing and other breaches of the Code.
In addition to raising similar issues to the Little Images case, Pampered Paws Connection usefully reminds franchisors of the requirement that franchisees must demonstrate loss that has resulted from claimed technical breaches. Further, the case highlights the importance of providing the full scope of information to a franchisee in relation to the control that a franchisor exercises over a franchising system in order to ensure the franchisee is fully informed of the agreement upon which it is embarking. The case also highlights the importance of both parties attending to the disclosure process diligently. The third line forcing issue reminds franchisors of the need to review supply agreements, and seek authorisation from the ACCC in relation to these if that is required.