Barters Sandwiches (B) is a large franchise chain headquartered in London specialising in selling chicken sandwiches. B
Question:
Barters Sandwiches (B) is a large franchise chain headquartered in London specialising in selling chicken sandwiches. B is incorporated in the United Kingdom (UK) and has over the last few years expanded its franchises across the world. In early 2021, a Victorian franchise company called Siska (S) wanted to expand on its restaurant franchises and met with a representative of B to discuss options. S and B agreed to give S an exclusive right over franchises in Victoria. This was going to be the first B franchise in Australia and S was keen to have exclusive rights in Victoria. They agreed that S would pay using electronic transfer payments to B's headquarters in London but that it would do so in Australian dollars. They also agreed that in the case of a dispute arising out of their franchise agreement they would arbitrate in London. Australia and the UK are both Convention countries and parties to the New York Convention.
In 2022 a Queensland company called Loop (L) also negotiated with a representative of B in Brisbane to set up franchises in Queensland. Given that L specialised in sandwiches it wanted exclusive rights over the franchise in all of Australia. They paid a substantial sum to negotiate the full rights to the B franchise in Australia. The agreement between B and L, but not the one between B and S, was registered in the UK under their Franchise Regulations Act1971. This registration is required for an overseas franchise agreement to be legally binding on the parties. B also registered themselves as a foreign company and set up their registered offices in Brisbane, Queensland. The contract provided that L would pay B in Brisbane and in Australia dollars. It also provided that in the case of a dispute they would arbitrate in London.
After discovering that B has given away to L all the franchise rights for Australia, S quickly serves a writ of claims on B from the Supreme Court of Queensland without seeking leave. The writ gets served on B at its registered offices in Brisbane. The writ is a claim for $8 million against B for breach of the franchise agreement between them. B in turn claims that the contract between itself and S was not legal or enforceable given that it was never registered under the Franchise Regulations Act1971.
- What choice of law issues in relation to the contract should B's legal advisors consider in deciding whether to contest the case in either the SC Qld or SC Vic.