Big Growth Promises. Zero Delivery.
A Costly Franchise Lesson.
Case Review: Watt v Shepherd (No 2) [2021] FCA 826
Everyone gets excited about growth.
“100 locations in 6 months.”
“550 in three years.”
“Hundreds of millions in backing.”
On paper, it sounds like momentum.
In reality, it can be nothing more than sales talk.
The Problem
In this case, a franchisor built an entire network on the back of aggressive growth and funding promises…
none of which ever materialised.
No capital.
No expansion.
No delivery.
What did happen?
Pharmacies were brought into the network based on those representations.
Fees were set at levels that only made sense if the growth actually occurred.
It didn’t.
The Outcome
The result was predictable.
The Court found the representations were misleading and deceptive, and also found unconscionable conduct. It declared the franchise agreements void from 30 June 2018, ordered the return of the Bush Chemist website and business name, and entered judgment for damages to be assessed.
This wasn’t just optimism.
It was a failure to have any real basis for what was being promised.
The Lesson for Franchisors
Growth projections aren’t harmless.
If you’re making claims about funding, expansion, or future profitability, you need to be able to back them.
Not hope.
Not intention.
Not “we’re working on it.”
Actual, reasonable grounds.
Because once franchisees rely on those representations, you’re accountable for them.
And if the model only works if everything goes right…
it probably doesn’t work at all.
Before you sell the vision, ask yourself:
Do we actually have reasonable grounds for what we’re saying?
Or are we selling an outcome we can’t deliver?
That’s the difference between a scalable franchise and a risky one.
Case: Watt v Shepherd (No 2) [2021] FCA 826
http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2021/826.html
https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCAFC/2024/143.html
If you’re reviewing your franchise documents or unsure whether your disclosure stacks up — it’s worth getting clarity early.
We can walk you through it.