Franchise Law

Franchising Injunctions: Preserving Your Rights And Maintaining The Status Quo

Injunctions play a key role in franchising. They are a specific tool that enables franchisors to enforce terms, relating to protecting their brand and trademarks, reputation and their franchises generally. They can also be used by franchisees to prevent a franchisor from wrongfully terminating their franchise arrangement.

Recently, Justice Barker of the Federal Court dismissed an urgent application for an injunction in the matter of W Hoy Pty Ltd v W.T.H. Pty Ltd [2018] FCA 310. His Honour determined this was not a matter where an injunction should be granted. He said that while some of the claims were arguable, they were not strong, and as such, the balance of convenience and justice did not warrant the granting of an injunction, as damages were an adequate remedy.

Misleading And Deceptive Advertising: Avoiding The Headache

The Federal Court decision against the manufacturer of Nurofen serves as a reminder of advertiser’s obligations when making claims about their products. The decision handed down in January 2018 provides guidance about what a proper scientific basis is to support a representation made in an advertisement. A proper basis is vital in order to avoid potential liability arising out of the operation of the misleading and deceptive conduct provision under the Australian Consumer Law for those who get it wrong.

Lessons From 2017

2017 was another eventful year for the franchising sector, with the introduction of new laws to protect vulnerable workers, the Australian Competition and Consumer Commission issuing the first infringement notices under the Franchising Code of Conduct (the Code) and the first proceedings under the Code.

This article provides a summary of some of the new laws impacting franchising and some of the court cases decided in 2017 as well as the lessons to be learned from them.

INSOLVENT TRADING AND RELATED ENTITIES AS LAST CREDITOR PRIORITY

The recent case of Perrine v Carrello [2017] WASCA 151 demonstrates that flexible payment arrangements between related entities may still be considered debts and that if this debt is incurred while the company is insolvent, it may constitute insolvent trading, rendering directors personally liable for the debt. The Court not only ordered the directors to repay to the company the losses suffered but also said the related entities would not be entitled to any distribution in the liquidation until all other creditors had been paid.