It’s a sad, but true fact that franchisees cheated by crooked franchisors or seriously disadvantaged when incompetent franchisors go broke, have very little chance of winning in court.

The Australian legal system mandates that solicitors instruct barristers with the simple result that those with the deepest pockets usually win. Australian lawyers don’t work on contingency, class actions are few and far between and Australian courts level only compensatory damages, not punitive damages.

Contrast this with the United Sates where aggrieved franchisees can hire  lawyers who get paid only if they win their cases, courts award treble punitive damages and class actions are easily brought.

Additionally, a crooked franchisor that mails misleading information has to deal with the FBI, because once fraudulent mail crosses a state border, the offense becomes federal.

Simply put, it’s easier to cheat franchisees in Australia than in America and it’s harder for a cheated Australian franchisee to win in court.

I have a suggestion to level the Australian franchisor/franchisee playing field. However, many honest and competent franchisors will be appalled by my suggestion.

Let me state my orientation. I have always worked exclusively with franchisors and principals and would never do anything to weaken their positions.

Having said that, here is my suggestion – State and/or the Federal governments should provide legal aid to wronged franchisees. If legal aid is

deemed acceptable for accused rapists and murderers, surely there has to be some place for it to help Aussie battlers.

I can hear franchisors now, “Franchisees are never happy, and if you give them legal aid we’ll spend the rest of our working lives in court.”

They will also say that the Australian Franchising Code provides for compulsory mediation. It does, and mediation often works. But, mediation is for honest, competent franchisors dealing with honest franchisees where there is a genuine commercial dispute, not stupidity or cupidity.

Obviously, there have to be mechanisms to ensure vexatious franchisee litigants don’t get legal aid. That mechanism can be vested in the ACCC or a similar organization with the skills to evaluate whether franchisees’ claims are valid and the power to appoint lawyers to provide legal aid.

While we may read about dishonest franchisors being sued by the ACCC or incompetent franchisors going broke, we rarely read about those people that lose their homes, their life’s savings and sometimes their sanity and their lives. We don’t hear about marriages breaking up under the strain of insolvency or about the sense of despair that comes about when good people have nowhere to turn.

At the very least, legal aid for cheated franchisees, should be trialed by a state or the Federal government.