Franchise Council of Australia is funding a high court appeal to challenge a ruling it believes undermines the sector.

FCA, the peak representative body in the $128 billion franchising sector, will support an appeal in the Master Education Services v Ketchell case, with hearings hoped for as early as next month.


FCA executive director Steve Wright said the move had been agreed by the board of the FCA after extensive consultation with franchisor and franchisee members across the country.

“We believe a High Court ruling is necessary to restore certainty for the sector,” Wright said.

“The ramifications of this case are of serious significance for the franchise sector Australia-wide. It is the biggest single legal issue the FCA has faced in its 25-year history,” he said.

At the centre of the Ketchell case is the ruling by the NSW Court of Appeal that a breach of the Code of Conduct disclosure requirements rendered a franchise agreement illegal.

“This approach appears to us to be at odds with common practice in commercial law,” Wright said.

“The FCA supports the Code of Conduct and the disclosure regime which adds weight to it. We regard it as a positive contributor to good franchise practice – and an ingredient in the growth and success of the sector,” he said.

“It does not seem right to throw that away in a case where the intent of the Code has been complied with, as is the case in Master Education Services v Ketchell.

“The NSW Court of Appeal ruling potentially opens a door to opportunistic litigation which could be time-consuming, expensive and distracting, with serious negative impact on franchisors and franchisees,” Wright said.

“Legal actions based on the Ketchell precedent, as it currently stands, could be more about gaining commercial advantage than resolving genuine contractual disputes. The issue could be detrimental to the prospects of a franchisee getting a fair price for sale of a business. We don’t see these possibilities as good for the sector – and that is why we are seeking guidance from the High Court.”

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