FCA to Fund Franchisor High Court Appeal

Submitted by Deanne de Leeuw on Sun, 2008/04/20 - 01:39.

MELBOURNE (Blue MauMau) - The self-proclaimed top Australian franchising body, the Franchise Council of Australia (FCA), has announced it will fund an appeal to the Australian High Court on behalf of franchisor Master Education Services.

The High Court granted the franchisor special leave to appeal against the New South Wales Court of Appeal’s decision in Ketchell v Master Education Services, subject to the franchisor paying the franchisee’s costs of appeal.

The FCA sought funding from the Australian Competition and Consumer Commission and the Federal Government which was denied. The FCA will now the fund costs of the case itself on behalf of the franchisor.

The NSW Court of Appeal in the Ketchell v Master EducationServices case held that where a franchisor does not have a written acknowledgement that a franchisee has received, read and had an opportunity to understand the disclosure document, the franchise agreement is unlawful and unenforceable.

The decision to fund a franchisors legal action against a franchisee has left franchisees and other observers questioning the impartiality of the FCA, which purports to represent all sides of franchising.

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Franchising Doesn't Just Mean Selling Franchises

Submitted by Guest on Sun, 2008/04/20 - 08:24.

As the self-professed "franchising" body of Australia, why is the FCA backing the franchisor instead of the offended franchisee?

You would think the FCA would want to encourage that all franchise owners have the protection of a signed disclosure document before they purchase a franchise.

I agree with this totally

Submitted by Do Diligence on Sun, 2008/04/20 - 11:30.

This could save many people from financial hell. Just in our franchise about 98% did not fully understand the UFOC. Many didn't know what a franchise lawyer was or how much due diligence was involved.

We need that here in the United States. If Australia sees a need for this then it is proof that franchise owners do not have the protection they need. Especially before they sign a franchise agreement.

U.S. Was First

Submitted by Darnelle White on Sun, 2008/04/20 - 12:29.

You are making no sense. Since 1978 U.S. franchisors have been required to have business investors sign disclosure documents before an offering could be made.

Some 30 years later, Australia seems to be thinking that this might not be a bad idea.

Re: U.S. Was First

Submitted by Guest on Thu, 2008/05/01 - 00:29.

It doesn't matter who was first and actually this law has been in Australia for quite a long time too. The significance of this is that the FCA are attempting to prevent the enforcement of the code through their High Court challenge. How many other international franchising organisations are out there loudly proclaiming that they represent all sides of franchising only to show by their actions that they are really a franchisor loby group?

All of them

Submitted by RichardSolomon on Thu, 2008/05/01 - 00:55.

That's what industry groups/association do for a living - bruit it about that they represent the best interests of the industry, not just  one truncated view. --

Richard Solomon, FranchiseRemedies.com,  has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School

The Luck of the Irish

Submitted by Bob Frankman on Sun, 2008/04/20 - 14:06.

The government may insist that we business investors put our signature on a disclosure document that provides investment information some ten days before a sale can be made, but it cannot force us to understand our investment or even read the 300 page document.

If we want to test how lucky we are, it is our God given right to do so.

I believe in order

Submitted by Do Diligence on Sun, 2008/04/20 - 14:54.

to protect yourself. You need to take at least 4 months studying the world of franchising. Then once you do then read your UFOC/FDD. It makes a world of difference in understanding and spotting misleading disclosures.

The problem is many people believe they are buying a so called "proven system." People who are not informed were told this and many haven't had a degree in business. The more educated the better.

In our franchise many never understood due diligence or what a franchise lawyer was. I believe good franchisors would insist on killer due diligence and inform their future zee about a franchise lawyer. Lawyer is not good enough.

Doesn't surprise me

Submitted by Do Diligence on Sun, 2008/04/20 - 12:58.

I am just touching the tip of the iceberg in understanding the world of franchising. Thanks for correcting me.

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