exPert Advice
their competitors in circumstances where
doing so may cause those franchisees to
breach existing contracts; or- making promises which the franchisor
cannot fulfil or making any inaccurate
or deliberately misleading or deceptive
statements.
For franchisees, this case emphasises that fixed
term franchise agreements oblige franchisees
to keep the franchised business operating
and remain in compliance with the franchise
agreement for its full term. Franchisees cannot
simply terminate a franchise agreement or exit
the business without the franchisor’s consent
unless the agreement provides a right to do so.
Such conduct will, in most cases, constitute
unlawful abandonment of the franchise and
will ordinarily give the franchisor a right to
sue the franchisee for damages.
yoGURbERRy cASE^4
This case arose in the wake of the much-
publicised Fair Work Ombudsman’s
(FWO) investigations into underpayment
of employees in the 7-Eleven and Caltex
franchise networks. The case centred around
multiple contraventions of the Fair Work Act
2009 (Cth) by the employer and franchisee,
Yogurberry World Square Pty Ltd (Y WS),
including underpayment of workers and
breaches of other provisions relating to
minimum shifts, record-keeping and pay
slips in respect of four employees at its frozen
yoghurt franchised store in Sydney’s CBD.
The Federal Court ultimately fined Y WS
$75,000 for those contraventions. In addition,
the Court also found accessorial liability and
imposed the following penalties on three
further respondents:- YBF Australia Pty Ltd (YBF), the Master
franchisor of the Yogurberry chain in
Australia who had also previously operated
the store in question, was ordered to pay a
$25,000 fine; - CL Group Pty Ltd (CL Group), an
associated company of YBF which
performed accounting, payroll, operational
and logistical functions for Yogurberry
stores in Australia, was ordered to pay a
$35,000 fine; and - Ms Soon Ok Oh, the sole director and
secretary of the company which owns Y WS
and an officer of all three of the corporate
respondents, was fined $11,000.
In finding secondary liability, it was
significant that each respondent had specific
involvement in, and knowledge of, the
contraventions.
“Fixed term franchise agreements oblige franchisees to keep the
franchised business operating and remain in compliance with
the franchise agreement for its full term. Franchisees cannot
simply terminate a franchise agreement or exit the business
without the franchisor’s consent unless the agreement provides
a right to do so.”