Cutler Hughes Harris - Franchisors beware - unfair contracts claims still available for disgruntled franchisees?
Cutler Hughes Harris reports that the Industrial Court of NSW Houlburn & anor v Shig Pty Ltd [2007] NSWIRComm 104 found recently that the franchising code provisions of the Trade Practices Act (TPA) did not intend to ‘cover the field’ in respect of misrepresentations made by a franchisor to a franchisee. As a result, the franchisee could complain under s.106 of the Industrial Relations Act (IR Act) - the ‘unfair contracts’ jurisdiction - about the franchisor’s misrepresentations.
According to Cutler Hughes Harris, if the IR Act does apply, then parties to franchise agreements will not be able to seek remedies under s.106 of the IR Act, or the Queensland Act. However, the definitional boundaries in the federal and state laws are a little different. Accordingly, there are likely to be some significant jurisdictional arguments about whether there is still room for some contracts to be reviewed under state laws. And if there is, then Houlburn v Shig removes the Franchising Code as a possible obstacle for franchisees.