The main franchise industry body, the Franchise Council of Australia, has announced it will fund an appeal to the High Court in the controversial Ketchell case on behalf of the franchisor.
FCA Executive Director Steve Wright said the decision to fund the legal action was agreed by the Board of the FCA after extensive consultation with franchisor and franchisee members across the country.
“We believe a High Court ruling is necessary to restore certainty for the sector,” Mr Wright said.
“The ramifications of this case are of serious significance for the franchise sector Australia-wide. It is the biggest single legal issue the FCA has faced in its 25-year history,” he said.
The High Court granted the franchisor special leave to appeal against the NSW Court of Appeal’s decision in Ketchell v Master Education Services, subject to the franchisor paying the franchisee’s costs of appeal.
After unsuccessfully seeking help from the ACCC and the Federal Government, the FCA will now the fund costs of the case itself – estimated to be in the vicinity of $200,000.
The NSW Court of Appeal held in the case that where a franchisor does not have a written acknowledgement that a franchisee has received, read and had an opportunity to understand the disclosure document, the franchise agreement is unlawful and unenforceable.
The FCA says this amounts to rendering a franchise agreement illegal for a technical breach of the code – and it is a decision that could create great uncertainty for 10% of franchise agreements or 5000 franchisees and their franchisors.
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