King v Cake It Away Pty Ltd & Ors [2002] NSWIRComm 140

King v Cake It Away Pty Ltd & Ors [2002] NSWIRComm 140

The applicant did not establish that the franchise agreement or related finance arrangements were unfair within s 106. Although some evidence suggested that Tony Tartak may have represented that stores achieved at least $5,000 per week turnover, the assessment of unfairness required consideration of the whole relationship. The applicant misrepresented his financial position to both the franchisor and the bank; ignored clear warnings and recommendations to obtain independent financial advice; had access to franchisee information; failed to operate the business in accordance with the franchisor's procedures; retained an incompetent baker; effectively gave up before closing the business; and...

Jurisdiction
Australia
Judgment Date
12 July 2002
Procedural Posture
Application Under S 106 of the Industrial Relations Act 1996 Seeking Relief in Relation to an Alleged Unfair Franchise Agreement and Related Finance Arrangements / Judgment After Hearing
Outcome
Summons dismissed as against all respondents; cross-claim dismissed; costs of the eighth and ninth respondents reserved.
Legal Topics
['franchise Agreement Alleged to Be Unfair Under S 106 of the Industrial Relations Act 1996' 'alleged Misrepresentations by Franchisor About Turnover and Income Projections' 'alleged Unfair Conduct by Bank in Financing Franchise Acquisition' "applicant's Misrepresentation of Financial Position to Franchisor and Bank" 'assessment of Unfairness Under S 106']
['industrial Relations' 'unfair Contracts' 'franchising' 'banking and Finance'] ['franchise Agreement Alleged to Be Unfair Under S 106 of the Industrial Relations Act 1996' 'alleged Misrepresentations by Franchisor About Turnover and Income Projections' 'alleged Unfair Conduct by Bank in Financing Franchise Acquisition' "applicant's Misrepresentation of Financial Position to Franchisor and Bank" 'assessment of Unfairness Under S 106']

Case Brief

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Procedural Posture

Application Under S 106 of the Industrial Relations Act 1996 Seeking Relief in Relation to an Alleged Unfair Franchise Agreement and Related Finance Arrangements / Judgment After Hearing

Legal Issues

  1. 1 ['Whether the franchise agreement between the applicant and Cake It Away (Franchising) Pty Ltd was unfair within the meaning of s 106 of the Industrial Relations Act 1996.' "Whether alleged representations about other Cake It Away stores' turnover and income projections made the franchise agreement unfair." 'Whether alleged deficiencies in training, equipment, disclosure, and operational support established unfairness under s 106.' 'Whether the finance arrangements with St George Bank Ltd and Advance Leasing Ltd were unfair within s 106.' "Whether the applicant's own conduct, including misrepresenting his financial position and failing to follow operating procedures, affected the assessment of unfairness."]

Ratio Decidendi

The applicant did not establish that the franchise agreement or related finance arrangements were unfair within s 106. Although some evidence suggested that Tony Tartak may have represented that stores achieved at least $5,000 per week turnover, the assessment of unfairness required consideration of the whole relationship. The applicant misrepresented his financial position to both the franchisor and the bank; ignored clear warnings and recommendations to obtain independent financial advice; had access to franchisee information; failed to operate the business in accordance with the franchisor's procedures; retained an incompetent baker; effectively gave up before closing the business; and...

Court Disposition

Summons dismissed as against all respondents; cross-claim dismissed; costs of the eighth and ninth respondents reserved.

Orders

  • ['The summons is dismissed as against all of the respondents.' 'The cross claim of the eighth and ninth respondents against the first to seventh respondents is dismissed.' 'The costs of the eighth and ninth respondents as against the applicant and as against the first to seventh respondents are reserved.' 'Liberty...