Freedom Foods Pty Ltd v Blue Diamond Growers [2021] FCAFC 86

Freedom Foods Pty Ltd v Blue Diamond Growers [2021] FCAFC 86

The license agreement did not satisfy paragraph (b) of the definition of 'franchise agreement' in the Code: the agreement did not confer a right to carry on a business under a system or marketing plan substantially determined, controlled or suggested by Blue Diamond. Control over key aspects of marketing and promotion for the products rested with Freedom Foods; Blue Diamond's rights under the agreement served primarily to protect its brand. Accordingly, the agreement is not a franchise agreement, and the Code (including the prohibition on non-Australian jurisdiction dispute clauses) does not apply.

Parties
First Applicant: Freedom Foods Pty Ltd; Second Applicant: Freedom Food Group Ingleburn Pty Ltd; Third Applicant: Freedom Foods Group Trading Pty Ltd; Fourth Applicant: Pactum Australia Pty Ltd; Respondent: Blue Diamond Growers
Jurisdiction
Australia
Judgment Date
28 May 2021
Procedural Posture
Application for Leave to Appeal (corporations / Arbitration) / Appeal From Interlocutory Decision
Outcome
Leave to appeal granted; appeal dismissed.
Legal Topics
Application of Franchising Code of Conduct, Jurisdiction Over International Arbitration Clause, Definition of Franchise Agreement, Interlocutory Injunctions Restraining Arbitration
Corporations Law Commercial Law International Commercial Arbitration Application of Franchising Code of Conduct Jurisdiction Over International Arbitration Clause Definition of Franchise Agreement Interlocutory Injunctions Restraining Arbitration

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Parties

Freedom Foods Pty Ltd

First Applicant

Freedom Food Group Ingleburn Pty Ltd

Second Applicant

Freedom Foods Group Trading Pty Ltd

Third Applicant

Pactum Australia Pty Ltd

Fourth Applicant

Blue Diamond Growers

Respondent

Procedural Posture

Application for Leave to Appeal (corporations / Arbitration) / Appeal From Interlocutory Decision

Legal Issues

  1. 1 Whether the licence agreement is a franchise agreement for the purposes of the Franchising Code of Conduct
  2. 2 Whether the arbitration clause is of no effect under the Code due to a requirement for arbitration outside Australia
  3. 3 Whether the 20% turnover carve out in the Code applies

Ratio Decidendi

The license agreement did not satisfy paragraph (b) of the definition of 'franchise agreement' in the Code: the agreement did not confer a right to carry on a business under a system or marketing plan substantially determined, controlled or suggested by Blue Diamond. Control over key aspects of marketing and promotion for the products rested with Freedom Foods; Blue Diamond's rights under the agreement served primarily to protect its brand. Accordingly, the agreement is not a franchise agreement, and the Code (including the prohibition on non-Australian jurisdiction dispute clauses) does not apply.

Court Disposition

Leave to appeal granted; appeal dismissed.

Orders

  • Leave to appeal granted.
  • The appeal is dismissed.