Seal-A-Fridge's Fate Sealed
As the Canadian Courts contemplate the legalities of franchisors overcharging franchisees, it appears Australian courts have already made their decision. Basing their ruling on "unconscionable conduct towards its franchisees" the courts "found that the conduct amounted to a “unilateral profit gouge”. The franchisor, Seal-A-Fridge, is a mobile refrigeration seal replacement business.
"This case sends a strong message to franchisors that they cannot abuse the position of strength that they have in relation to their franchisees in order to make unfair and unreasonable personal gains at the expense of franchisees,” ACCC chairman Graeme Samuel said today. - Dynamic Business
Unfortunately, "The court found that Seal-A-Fridge had no contractual basis for the fee increases." So, if the contract did allow the gouging of franchisees, would it then have been legal?
Again, as some here decry "The Nanny State", as long as franchisors can contract in fraudulent behavior, there is no other way for franchisees to be protected from "unconscionable conduct" without government stepping in.