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The Billy Baxter’s Court of Appeal ruling in favor of the franchisee to the tune of $1.2M has law firms and the Franchise Council of Australia prospecting for additional revenue from Australia’s franchisors.
Lessons for prospective franchisees and franchisors;
Firstly, it's imperative that thorough due diligence of a franchise system is undertaken, even in the face of overwhelmingly positive [often misleading] marketing. Franchising.net.au
Congratulations go to FCA for consistency;
While the intention of the court may be positive in reinforcing the law's emphasis on avoiding potential franchisees being misled, even if unintentionally, it may nonetheless have the unintended effect of actually undermining access to useful and important [and phony] information for potential franchisees.
Unfortunately, the bottom line may be that highly relevant information becomes less available to potential franchisees and leads them into increased research and due diligence costs before they get into business.
It would seem the court of the FCA has decided to promote franchisors as never intentionally misleading gullible prospective franchisees.
The article then goes on to warn about over-enthusiastic representatives ‘gilding the lily’ but there is no mention about the lucrative incentives handed out to encourage vigorous efforts to sign up almost any franchisee at almost any cost.