SPAR Licensing Pty Ltd v MIS QLD Pty Ltd (No 2) [2012] FCA 1116

SPAR Licensing Pty Ltd v MIS QLD Pty Ltd (No 2) [2012] FCA 1116

The franchisor (SPAR Licensing) breached the Franchising Code by failing to give the franchisee (MIS) a current disclosure document with up-to-date financial information prior to execution of the Franchise Agreement, and made representations as to exit rights that were misleading and deceptive. The appropriate remedy was not rescission but to vary the Franchise Agreement and Special Offer Agreement ab initio to reflect the representations, permitting termination on payment of specified fees, together with damages for loss sustained due to inability to convert to IGA. SPAR’s contract and competition law claims failed.

Jurisdiction
Australia
Judgment Date
15 October 2012
Procedural Posture
Civil / Final Judgment / Orders on Liability and Relief Pending Further Orders
Outcome
Cross-claimants succeed on liability for breach of Franchising Code and misleading conduct; applicants’ contract/competition claims dismissed; declaration of contravention; variation of agreements and damages awarded; final form of orders to be agreed or relisted.
Legal Topics
['franchise Agreement Termination' 'implied Contractual Rights' 'exclusionary Provision' 'market Definition' 'competition Lessening' 'mandatory Disclosure' 'misleading and Deceptive Conduct' 'remedies Under S 82 and S 87' 'franchising Code Compliance']
['contract Law' 'competition Law' 'consumer Law' 'franchising'] ['franchise Agreement Termination' 'implied Contractual Rights' 'exclusionary Provision' 'market Definition' 'competition Lessening' 'mandatory Disclosure' 'misleading and Deceptive Conduct' 'remedies Under S 82 and S 87' 'franchising Code Compliance']

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 1 Authorities cited 2 Party arguments 2 Amounts and remedies 1
Sign in to unlock

Procedural Posture

Civil / Final Judgment / Orders on Liability and Relief Pending Further Orders

Legal Issues

  1. 1 ['Whether the franchisee had express or implied rights to terminate the Franchise Agreement' 'Whether certain arrangements breached s 45 of the Competition and Consumer Act 2010 (Cth) regarding exclusionary provisions and substantial lessening of competition' 'Whether the franchisor breached the Franchising Code of Conduct by not providing current financial disclosure' 'Whether pre-contractual representations were misleading or deceptive under s 18 of the Australian Consumer Law' 'Entitlement and quantum of damages; appropriate remedies including variation or setting aside of agreements']

Ratio Decidendi

The franchisor (SPAR Licensing) breached the Franchising Code by failing to give the franchisee (MIS) a current disclosure document with up-to-date financial information prior to execution of the Franchise Agreement, and made representations as to exit rights that were misleading and deceptive. The appropriate remedy was not rescission but to vary the Franchise Agreement and Special Offer Agreement ab initio to reflect the representations, permitting termination on payment of specified fees, together with damages for loss sustained due to inability to convert to IGA. SPAR’s contract and competition law claims failed.

Court Disposition

Cross-claimants succeed on liability for breach of Franchising Code and misleading conduct; applicants’ contract/competition claims dismissed; declaration of contravention; variation of agreements and damages awarded; final form of orders to be agreed or relisted.

Orders

  • ['Parties to confer and prepare draft declarations and orders reflecting the reasons for judgment and relief identified (declaration of contravention of s 51AD of the Trade Practices Act and s 18 of the Australian Consumer Law; variation of Franchise and Special Offer Agreements to permit termination on payment of...