Green Acres case shows need for franchising regulation – lawyer

Deirdre Watson

A franchisee’s fight against Green Acres shows how small business owners need better protection, a top lawyer says.

Green Acres franchisee Garth Ruebe says he felt bullied after having to go to the Auckland High Court to continue operating his business.

Mr Ruebes believed that after his 10-year contract with Green Acres had expired he could operate a new business and use his existing customer list.

Justice Graham Lang said both sides had an arguable case, but ruled that as the damage caused by any injunction would not have a large impact on Green Acrres given the total size of its business, Ruebe’s could continue to operate.

The matter is now going to arbitration. 

Barrister Deirdre Watson says the case should have never gone to the High Court and demonstrates a need for protection in this area.

She says the Ruebes probably did not have any idea what the business would look like 10 years from when they started, and it is unfair that they would have worked “their guts out” for nothing.

Ms Watson says vulnerable franchisees that start a business with $10,000-15,000 would benefit from legislative protection such as requirements to get legal advice and disclosure requirements.

There are no specific franchising laws in New Zealand but contract law applies.

In Australia, a franchising code of conduct regulates the actions of parties and protects franchisees from being treated unfairly but that has been bogged down with amendments since its introduction, she says.

Ms Watson says regulation was probably not needed for bigger, retail type franchises but would suit smaller, labour-intensive businesses like cleaning companies.

“The problem with wider legislation is that good operators can get caught up in it and miss targets. But in my view there are businesses which need protection."

Ms Watson says while it is easy to frame Green Acres as bullies, the commericial reality is that it has to set a precedent for other franchisees.
 

vyoung@nbr.co.nz

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