Franchisors Can Now Breathe – High Court Decides Ketchell

Mondaq News Alerts:

The High Court handed down its decision in the Ketchell case on 27 August 2008, overturning the New South Wales Court of Appeal’s decision and confirming that a breach of the Franchising Code of Conduct (Code) in failing to obtain a legal sign off, does not mean the contract is dead. But the case is not a green light for franchisor’s to ignore the Code.

The New South Wales Court of Appeal said that a breach of the Code rendered a franchise agreement illegal. This gave franchisors and the entire sector cause for serious concern. However, the High Court unanimously held that a breach of a franchise agreement did not necessarily bring a franchise contract to an end as there are other remedies available.

It is the other remedies available when the Code is breached that franchisors need to bear in mind. Though you might have a contract prepared in breach of the Code and this case says you can still sue on it, the breach of the Code can still bring claims for damages, injunctions and specific orders.

Read the History of the case.