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As a Franchisor could you be sued?

Posted by Carolyn Dufton on 6 July 2012

Reading the court case transcript was a reminder for me as to how easy it is for intitial discussion between Franchisor and franchisee to be misleading.

In summary, incase you don't have time or the inclination to read the transcript.

A franchisee couple has been awarded $1.22 million in damages after a successful appeal against franchisor Billy Baxter's
The franchisor's representative, advised the franchise prospects that he anticipated a turnover for the business of $1.3 million, and suggested that the turnover would allow the business to pay the rent and return a profit.

These representations made during the course of negotiations for the site at Glenelg drew comparisons with an existing Billy Baxter's outlet in Norwood, another Adelaide suburb.

However, the Glenelg franchise suffered losses, which meant the franchisees were unable to pay the fees due under the franchise agreement. They then terminated the franchise agreement.

The original judgment found in favour of the franchisor, however, a Victorian Supreme Court of Appeal decision has found there were no reasonable grounds for The Franchisor's representative to make the representations regarding turnover and has awarded the damages payout to the franchisee.

To read the full court transcript click here Billy Baxter Franchising Case.

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Author: Carolyn Dufton
About: Carolyn Dufton Dip. Bus (Franchising) heads the team as the owner and manager of franchisingplus. Carolyn has a wealth of small business experience, and many years of hands on franchising experience.
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