In 2003, Bank of Queensland Ltd (“BOQ”) embarked upon a program of interstate expansion. Between August 2004 and April 2007, BOQ appointed a number of franchisees in New South Wales and enabled them to undertake banking operations as its agents through “owner managed branches” (or “OMBs”). Some of the OMBs were unsuccessful and their proprietors suffered losses that forced them to cease trading. Some unsuccessful proprietors brought proceedings against BOQ alleging misleading or deceptive conduct in the course of the negotiation and formation of the franchise agreements.
The positive representaitons
The court held the positive representations complained were not misleading and deceptive because:
- It was not sensible or possible for the bank officer to speak meaningfully of what a particular franchisee in a particular location, operated according to future decisions made by particular proprietors following an unknown business plan could or would achieve in terms of volume of business over any particular period.
- The statements were at most, an opinion to the effect that, if actual circumstances in a particular case precisely matched the franchisee they were based on, there was a statistically objective basis for a conclusion that particular financial consequences would likely follow.
- Commercially sophisticated persons such as the franchisees would have appreciated the statements as such.
The representations by silence
In the circumstances, there could have been no “reasonable expectation” on the part of prospective franchisees that the bank would take positive and unsolicited action to share with them information the bank possessed about the financial performance of existing franchisees. The relevant circumstances were that the bank had made it clear, both orally and in writing, that
- it was for prospective franchisees to investigate the feasibility and viability of their own business proposal;
- the bank could not give assurances or make predictions about revenue or profitability of prospective franchisees;
- prospective franchisees should talk to other existing franchisees; and,
- the bank would facilitate introductions to other franchisees for that purpose.