A Queensland-based franchisor accused of breaking her franchise agreement with Essential Beauty Franchising has failed in an attempt to shift court proceedings to her home state of Queensland from the franchisor’s home of South Australia.
Earlier this month, the Federal Court in Adelaide ruled there was no sufficient reason shown to transfer the proceedings to Queensland.
But Justice Mansfield did not dismiss the application of transfer, so the respondents could renew their application if circumstances changed.
Ben Hamilton, partner at Hall and Wilcox lawyers, says the real issue is a breakdown of the franchise system.
Essential Beauty Franchising has accused former Queensland master franchisee Ann Marie Donnarumma of breaching her franchise agreement by allegedly being involved in setting up another company – called Essential Body Pty Ltd – run by her spouse, Mark Andrew Oliphant.
Essential Beauty Franchising argues that Essential Body is competing with its business and could mistakenly be viewed as linked to its own. It also argues that the former Queensland master franchisee passed on confidential information to the business.
The respondents argued that the restraints were unenforceable due to being unreasonable and contrary to public policy.
“They seem to be suggesting that the former master franchisee has given the system to the competing business,” Hamilton says.
Middletons partner Chris Nikou says in general terms, “when people are caught in litigation, they think they have an advantage if it’s held in their home state.”
Nikou notes that 90% of cases are settled before going to court, and of the remainder, a good proportion settle before final judgement.
Noting the parties had already had one go at mediation, he says the court may require further mediation down the track, but the number of issues in dispute might make it difficult to reach a resolution.
The case did not quantify the damages sought.
