A Victorian appeal case has found that franchisees establishing a new Billy Baxter’s restaurant at Glenelg were misled by representations as to the sales estimates they could expect in the first year.

The Court of Appeal overturned the original decision and awarded the franchisees $1.2 million in damages. The Court determined that the initial figures provided by the restaurant’s representative were accompanied by the required warnings as to independent advice but had “no logical connection” to support the estimates.

Franchise Council of Australia executive director Steve Wright warned the decision was likely to increases insurance and research costs and ultimately dissuade franchisors from helping franchisees.

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