In a key decision for the franchising industry, the Court has decided not to throw out a case brought against Retail Food Group Limited (RFG). The case, Andromedas v Petrinovic, centres on the Crust Pizza franchise and looks at whether a franchisor like RFG can be held responsible for workplace breaches—such as underpayment—committed by one of its franchisees.
Background
20 March 2025 – Federal Circuit and Family Court of Australia (Division 2)
In an important decision for the franchising sector, the Federal Circuit and Family Court has refused to summarily dismiss proceedings brought against Retail Food Group Limited (RFG) in the matter of Andromedas v Petrinovic [2025] FedCFamC2G 366. This interlocutory judgment explores the circumstances in which a franchisor may be held liable for workplace contraventions committed by a franchisee.
The applicant, Ms Andromedas, alleges she was underpaid more than $119,000 while working at two Crust Pizza outlets: one in Liverpool and another at the Flinders Hotel. She also alleges breaches of the Fair Work Act 2009 (Cth) (FW Act), including failure to provide payslips, maintain records, and display workplace rights.
The franchisee of both locations was Vinpetrin Pty Ltd, operated by Vinko Petrinovic. RFG, the third respondent, is the ultimate holding company of CGP Systems Pty Ltd (CGP), the franchisor entity under the franchise agreement.
RFG’s Application for Summary Dismissal
RFG sought summary dismissal of the claims against it, arguing that it was not a “responsible franchisor entity” within the meaning of section 558A(2) of the FW Act. RFG claimed the applicant had no reasonable prospect of success, as the franchisor under the agreement was clearly CGP—not RFG.
The franchise agreement supported this view, expressly stating that CGP was the entity granting the franchise rights. The agreement also contained a definition of “Crust” that extended to related entities only “where the context otherwise indicates.” The court held that this wider definition did not support the applicant’s argument that RFG should be considered a franchisor.
The Court’s Findings
While the court agreed with RFG that:
RFG was not the franchisor in the ordinary or statutory sense, and
The provisions of section 558B(2) (which imposes liability on a holding company of a contravening employer subsidiary) did not apply because RFG was not the holding company of the employer,
it refused to summarily dismiss the claim.
Importantly, the court recognised that it may still be open to the applicant to re-plead the case under the accessorial liability provisions of section 550 of the FW Act. These provisions allow a party to be held liable if they were involved in a contravention, even if they are not the employer.
The applicant had not yet properly pleaded accessorial liability, particularly in relation to the Flinders Hotel location. However, the court granted her leave to amend her statement of claim to do so.
Implications for Franchisors
This case is a reminder to franchisors—especially parent or holding companies—that they can still be pulled into legal action, even if they aren’t the direct employer or named in the franchise agreement.
If a court believes a franchisor was involved in workplace breaches (like underpaying staff), they may still have to face the case under what’s called accessorial liability.
It also shows how important it is to have clear, well-drafted franchise agreements. Trying to rely on broad or vague definitions won’t always protect you from being taken to court.
Next Steps:
Ms Andromedas can now amend her legal claim to include this argument and pursue RFG under section 550. The case will return to court on 7 April 2025 to see how it progresses.
How to protect your business:
To protect your business:
- Review your franchise agreements and organisational structure.
- Make sure employment obligations are clearly understood and followed at all levels.
- Seek legal advice if you’re unsure about your exposure to Fair Work claims.
If you’d like support reviewing your franchise arrangements or managing workplace compliance risks, our franchise law team is here to help.
