Girchow Enterprises Pty Ltd v Ultimate Franchising Group Pty Ltd (Final Orders) [2023] FCA 500

Girchow Enterprises Pty Ltd v Ultimate Franchising Group Pty Ltd (Final Orders) [2023] FCA 500

Where voidness of franchise agreements is established and relevant personal guarantees are also invalid, compensation must be paid for resultant loss, and further inquiry as to particular losses is appropriate where existing evidence is unreliable but loss is established.

Parties
First Applicant: Girchow Enterprises Pty Ltd; Second Applicant: Karim Girgis; Third Applicant: Sherif Girgis; Fourth Applicant: Paul Chau; Fifth Applicant: Activ Health Clubs Pty Ltd; Sixth Applicant: Richard Kim; Eighth Applicant: Advanced Club Management Pty Ltd; Ninth Applicant: Laziz Mirdjonov; First Respondent: Ultimate Franchising Group Pty Ltd; Second Respondent: Mazen Hagemrad; Third Respondent: Samer Husseini; Fourth Respondent: Membership Services Australia Pty Ltd
Jurisdiction
Australia
Judgment Date
12 May 2023
Procedural Posture
Commercial Franchise Dispute / Final Orders
Outcome
Orders made as set out: franchise agreements declared void, related guarantees declared void ab initio, compensation awarded, referee referral for losses, costs orders made, certain claims and cross-claim dismissed.
Legal Topics
Franchise Agreements, Contract Voidance, Personal Guarantees, Compensation, Referee Reports, Costs
Commercial Law Corporations Law Franchise Agreements Contract Voidance Personal Guarantees Compensation Referee Reports Costs

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Parties

Girchow Enterprises Pty Ltd

First Applicant

Karim Girgis

Second Applicant

Sherif Girgis

Third Applicant

Paul Chau

Fourth Applicant

Activ Health Clubs Pty Ltd

Fifth Applicant

Richard Kim

Sixth Applicant

Advanced Club Management Pty Ltd

Eighth Applicant

Laziz Mirdjonov

Ninth Applicant

Ultimate Franchising Group Pty Ltd

First Respondent

Mazen Hagemrad

Second Respondent

Samer Husseini

Third Respondent

Membership Services Australia Pty Ltd

Fourth Respondent

Procedural Posture

Commercial Franchise Dispute / Final Orders

Legal Issues

  1. 1 Whether the UFC Gym Franchise Agreements should be declared void
  2. 2 Validity of personal guarantees related to franchise agreements
  3. 3 Entitlement to compensation for non-performance or voidness of agreements

Ratio Decidendi

Where voidness of franchise agreements is established and relevant personal guarantees are also invalid, compensation must be paid for resultant loss, and further inquiry as to particular losses is appropriate where existing evidence is unreliable but loss is established.

Court Disposition

Orders made as set out: franchise agreements declared void, related guarantees declared void ab initio, compensation awarded, referee referral for losses, costs orders made, certain claims and cross-claim dismissed.

Orders

  • UFC Gym Franchise Agreements declared void (orders 1, 4, 7)
  • Personal guarantees declared void ab initio (orders 2, 5, 8)