COMMENT: Bank's win over franchisees may warn off others

The Traderight case has been the latest - and quite possibly the last - in a long line of actions brought against Bank of Queensland by disappointed former franchise owners in the wake of a largely unsuccessful push into NSW from 2004 to 2007.
 
As Justice Barrett noted in his comments on behalf of fellow Appeal Court judges, over a period of about four years to 2010, no fewer than fourteen separate proceedings were commenced over franchise arrangements for OMBs in New South Wales.
 
"In most cases, a franchisee sued BOQ (and sometimes individual officers). In some cases, however, it was BOQ that sued a franchisee. Some actions were brought in the Supreme Court of Queensland, some in the Federal Court of Australia, some in the Industrial Relations Commission of New South Wales and the remainder in the Supreme Court of New South Wales," Justice Barrett observed.
 
Proceedings that commenced in arenas other than the Supreme Court of New South Wales were moved in whole or in part to that court sooner or later, according to Justice Barrett.
 
And there, the story became one of many happy returns for BOQ: "Given the long-running nature of the legal proceedings, and the fact that the separate actions have all found in favour of BOQ, the bank looks forward to this matter being finalised as soon as possible," was how BOQ concluded its short media release announcing the result.
 
While it represents an emphatic victory for BOQ over a large number of disgruntled former owner managers from New South Wales - and is likely to make other unhappy franchise owners think twice - on another level, the bank may find it's not the total victory claimed, as new franchise owners will be more wary in their dealings.
 
The case also highlights (a) the need for all intending business owners to do more due diligence than the stars in their eyes may allow at first blush; and (b) courts are not necessarily the best way to redress perceived power or bargaining imbalances - especially where the only viewpoint has been through hindsight.