Franchising Certainty For Motor vehicle Dealers
A recent High Court decision has removed an area of uncertainty in relation to the enforceability of franchise agreements by overturning the controversial decision of the New South Wales Court of Appeal in Ketchell v Master of Education Services Pty Limited. Motor vehicle dealer agreements are deemed by the law to be covered by the Franchising Code of Conduct (Franchising Code). The High Court held that failure of a franchisor to comply with clause 11 of the Franchising Code did not automatically result in the unenforceability of the franchise agreement. Clause 11 of the Franchising Code specifies that a franchisor must not enter into, renew or extend a franchise agreement unless the franchisor has received from the franchisee a written statement that the franchisee has received, read and had an opportunity to understand the disclosure document and the Franchising Code. The New South Wales Court of Appeal had held that failure to comply with clause 11 of the Code rendered a franchise agreement unenforceable.
