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Belinda Luc
Mortgage House has won against an ex-franchisee in a court appeal earlier this month that claimed the brokerage wrongfully terminated a franchise agreement.
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New South Wales based company Alpha Centauri Enterprises had lodged a court appeal against Mortgage House after being dropped for failing to meet the brokerage's key performance indicators (KPIs).
Having succeeded against the ex-franchisee in a 10-day trial back in 2009, Mortgage House defended the appeal, saying the ex-franchisee had repudiated the franchise agreement by its conduct, making its termination of the franchise agreement justified.
In determining the appeal, the court said while the franchise agreement did not provide instruction to Alpha as to how to conduct the business of mortgage broking, the franchisor’s 63-page long procedures manual did.
The court found that the franchise was required to comply with the manual, including reaching KPIs, and its failure to do so justified the franchisor's decision to end the contract.
“The failure of the applicant to maintain compliance with the key performance indicators was a basis of purported termination by the respondent,” the court said.
Alpha was ordered to pay the costs of the appeal.
