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The Supreme Court of Appeal in Victoria handed down $1.22 million in damages to Billy Baxters’ franchisees Ross and Sue Pollard in a case of misrepresentation. Franchising case Law in Australia comes along very rarely and typically relies on an amateurish franchisor underestimating the resourses of a franchisee.
Tony Garrison, partner at law firm HWL Ebsworth, highlighted the findings:
- the fact that the turnover would need to have been at least $1.3 million to make the rent affordable bore no logical connection as to what the actual turnover would be
- there was no qualitative analysis to justify the turnover figure of $1.3 million
- any reasonable grounds to expect that the business would be profitable would still not translate to a specific turnover figure
- the expected profit and loss figures in the business plan and the franchisees' belief in these figures do not equate to reasonable grounds for Mauviel's representations
- comparing the trading performance of an existing Billy Baxters restaurant at Norwood to the Glenelg restaurant was not reasonable, as the turnover of the Norwood outlet was well below the figure of $1.1 million the Pollards were told, and even further below the predicted turnover of $1.3 million for the Glenelg restaurant. Franchising.net.au
Australian franchisors will not exactly be fearful of this finding given that many do not perform as idiotically as Billy Baxters and even more have perfected the art of ensuring franchisees cannot fund litigation.
The full judgement is here.