Just Because It Looks Like a Franchise… Doesn’t Mean It Is
Case Review: W Hoy Pty Ltd v W.T.H. Pty Ltd [2018] FCA 310
This case came out of a long-standing commercial arrangement — over 20 years — where a business operated car rental outlets under major brands like Avis and Budget.
The Problem
On paper, it looked like a typical operator relationship. But the real issue was whether it was actually a franchise in disguise.
The operator argued exactly that — saying the agreements were franchising arrangements, which meant the Franchising Code should apply. That would bring in obligations around good faith, disclosure, and termination.
Then the franchisor pulled the trigger.
30 days’ notice. No real explanation.
The Outcome
The Court didn’t shut the door completely — it accepted there was at least an arguable case that the agreements could fall within the definition of a franchise.
But that wasn’t enough.
When it looked closer, the case wasn’t strong. The agreements still looked more like agency arrangements than true franchise agreements.
On the conduct side, the arguments around unconscionable conduct and lack of good faith were also considered — but again, not strong.
The key point:
Exercising a clear contractual right (like termination on notice) — even if it feels harsh — doesn’t automatically make it unlawful.
Outcome:
Application for injunction dismissed
No forced continuation of the relationship
Damages considered an adequate remedy
The Lesson for Franchisors
Just because something looks like a franchise doesn’t mean it is — and that distinction matters.
But more importantly:
If your agreement allows termination on notice, the Court will usually respect it.
The real risk isn’t the clause…
It’s how clearly your model fits within (or outside) the Code.
Judgement:
https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2018/310.html
Not sure where your agreements sit?
If you’re relying on termination clauses or operating close to the line between agency and franchise, it’s worth getting clarity before it becomes a problem.