Franchise Law

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.


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.

Claiming Privilege: So You Don’t Have To Tell All!

The right to claim ‘Privilege’ provides protection from having to make disclosures, answer questions or provide documents. It can be lost if conduct occurs that is contradictory to the maintenance of the confidentiality of the information over which privilege is claimed.

In today’s business environment, franchise systems and franchisees can potentially face the prospect of regulatory action against them by the Australian Competition and Consumer Commissioner, the Fair Work Ombudsman, the Australian Taxation Office, and where companies are involved, the Australian Securities and Investment Commission. The ability to keep matters confidential and avoid being compelled to provide information, answer questions or make statements can be a critical tool in defending prosecutions that may be commenced.

This article reviews different types of privilege and how this can be used or lost.