Transparency Isn’t Optional in Good Faith Negotiations
Case Review: Flip About Pty Ltd v Alamdo Holdings Pty Ltd
During the height of the COVID-19 pandemic, Flip About—a trampoline centre franchisee—was forced to close its doors. Like many, they sought rent relief under the National Code of Conduct.
The landlord, Alamdo, didn’t just take the “decline in turnover” at face value. They asked for more: profit and loss statements, balance sheets, and bank statements. They wanted to see the actual financial impact, not just a top-line revenue drop.
The Problem
Flip About refused. They argued that under the Code, proving JobKeeper eligibility (turnover drop) was enough. The standoff lasted months. Eventually, the landlord lost patience, issued a breach notice, and re-entered the premises. The tenant sued, claiming the landlord failed to negotiate in “good faith” and had unlawfully repudiated the lease.
The Outcome
The Court backed the landlord.
The judge ruled that “good faith” is a two-way street. While the National Code focuses on turnover for eligibility, the overarching principles require “open, honest, and transparent” negotiations. By withholding detailed financial data, the tenant prevented the landlord from making a “proportionate and appropriate” offer.
The Court found the landlord’s request for financial information was entirely reasonable and that the tenant’s refusal meant the landlord had technically complied with their obligation to negotiate. The termination was lawful.
Outcome
- Lease Forfeited: The landlord’s re-entry was upheld as valid.
- Damages Denied: The tenant’s multi-million dollar claim for loss of opportunity was rejected.
- Costs: The parties were directed to confer, but the tenant is facing a significant legal bill.
The Lesson for Franchisors
- Turnover is the Start, Not the End: Being an “impacted lessee” gets you to the table, but it doesn’t give you a blank cheque. If you’re asking for a waiver, expect to prove why you need it, not just that your sales are down.
- Good Faith Requires Data: Transparency is the currency of good faith. Withholding P&Ls or bank statements during a dispute is a high-risk strategy that courts are increasingly unlikely to reward.
- Behavior Matters: The Court looked closely at the conduct of both parties. The landlord’s persistent (but polite) requests for information saved them, while the tenant’s “legalistic” refusal to cooperate cost them their business.
Judgement:
https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2026/431.html
The ‘good faith’ label isn’t a shield for silence. If you’re currently negotiating a lease variation or rent relief, make sure your data is as strong as your argument. Is your documentation ready for a ‘good faith’ test?