But you said! - Considering pre-contractual representations

Representations made to a franchisee prior to entering into a franchise agreement should not be taken lightly. Often, it is these representations that form the basis of claims made by franchisees against a franchisor if the franchise business fails. In the circumstances, franchisors ought to exercise care in making any pre-contractual representations to ensure that the representations are accurate. Care also ought to be taken in ensuring that franchisors do not mislead or deceive franchisees by omitting to reveal to them the true state of affairs of the franchise network prior to the franchise agreement being signed.

The recent decision in Guirguis Pty Ltd & Ors v Michel's Patisserie System Pty Ltd & Ors [2016] QDC 117 provides a good example of how diligent risk management by a franchisor prior to entry into a franchise agreement can assist in defeating claims made by a franchisee down the track.