BRISBANE Australia: Here is an interesting lawsuit where the defendant franchisee sought to satisfy the Court that the franchisor had no legitimate right to introduce ‘termination’ terms and conditions when the franchise agreement had ‘expired’ at end of term. 

It is well accepted that narrow, technical or artificial interpretations of commercial contracts are to be avoided. [Cohen & Co v Ockerby & Co Ltd at 300 per Isaacs J] Therefore, although the Court ought not approach construction with abstract preconceived notions of reasonableness, it is necessary for the Court to take into account the reasonableness and commerciality of the outcome of a particular construction; the more unreasonable the result, the more unlikely it is that the parties intended it.

In Battery World  Pty Limited v Heavenly Bound Pty Limited & Ors [2009] NSWSC 1309 (1 December 2009) sources suggested the network was surprised when Judge Einstein J. handed down findings for the franchisor. 

I accept that clearly expiration through the effluxion of time “terminates” the Franchise Agreement between the parties, on the basis that by effluxion of time it is brought to an end. It is not possible, as a matter of ordinary meaning, to classify it otherwise.  Supreme Court Judge - Einstein J.

Of note most recently, and apparently following this decision, are reports that at least 3 more franchisees have been advised that their contracts will not be renewed forcing them to consider the implications of termination conditions.

More interesting perhaps was the suggestion from one Battery World franchisee that as this case has now concluded the ACCC may be more prone to pick up the pace with their longstanding investigations of complaints against Battery World.  The ACCC typically does not appear to pursue a franchise investigation and particularly when there is litigation underway.

Battery World is ably represented by Corrs Chambers Westgarth. Communications from Corrs constitute some of more than 200 pages outlining complaints of more than 30 breaches of the contract, the Trade Practice Act 1974 and the Franchising Code of Conduct containing extensive supporting evidence supplied to the ACCC.

Having reviewed the detailed complaint material formally lodged with the ACCC and following discussions with a number of franchisees the problems at Battery World, if accurately reported, appears to be nothing short of amateur franchising.  In this instance it is difficult to question the reliability of communications at least from the franchisor.  One franchisee who insists on anonymity summed it up this way;

I am happy enough with what the franchise offers, I am making good money, but the problem is with James Nixon-Smith [General Manager] and was with Brendan Mulheran [National Operations Manager] before he left.  If you ask the wrong question or they just don’t like you for any reason you go on something like a blacklist forever and then they go after you.  If it’s time for renewal they refuse and Battery World moves in to take everything.

Readers may be mystified as to how Battery World’s seemingly hard-nosed dictatorial approach toward selective franchisees is healthy for franchise brand reputation and network expansion.

Apart from complaints regarding detrimental mandatory purchasing guidelines, enforcement of directives in conflict with the franchise agreement and the operations manual, misrepresentation, third-line forcing [tie in], unreasonably delaying and/or rejecting prospective buyers of targeted franchises, breach of confidentiality, numerous alleged breaches of the Code it would seem mostly that the franchisor introduces personal likes and dislikes into how franchisees are managed differently with some allegedly neglected and abused. 

There is a constant thread within allegations made by franchisees with repeated references to bullying, threats and selectively breaching franchisees while denying support and introducing harsh and costly interpretations of the franchise agreement and the operations manual for some; and not for others. 

Coincidentally; Brendan Mulheran left Battery World not that long after the ACCC came calling. He now holds a similar senior position with the Go Gecko franchise.

Battery World is a member of Japan’s Century Yuasa Batteries Group of Companies which is one of the world's largest battery manufacturers with a long history of unquestionable integrity.

Yuasa motto: ‘Toward contributing to the richness of humanity and the world through the attainment of a creative enterprise group’. 

Franchisees consider that the parent is unaware of allegations of disgraceful abuse and shameful franchising at Battery World Australia.  CenturyYuasa would not appreciate accusations of ‘thuggish’ and ‘bullying’ behaviour and breaches of law apparently by the leading lights of their Australian Battery World investment.

In April last year Battery World with a network of 76 suggested that their target was to grow the network by 12 before the end of 2009.  Although Battery World did open a number of new locations in 2009 it ended with 74 outlets - down 2. 

At one stage the network apparently boasted over 100 outlets.  Franchisees allege that since Nixon-Smith took the reins at Battery World over 50 locations have closed or changed hands. 

In short; Battery World Australia appears to have seen more closures than openings in recent times and seemingly has difficulty delivering a competent franchising business operation for any stakeholder including Century Yuasa Batteries.  

Battery World Australia is another prominent member of the Franchise Council of Australia.

The outcome of the ACCC investigation will be reported if it is ever concluded. Further Court appearances are apparently not out of the question.