IN THE MAGISTRATES’ COURT OF VICTORIA

AT MELBOURNE                                                                                                                                                    E13776752

BETWEEN:

LOUISE JANNET

A.B.N. 76 521 426 791                                                                                                                                   Plaintiff

-and-

RED ROOSTER FOODS PTY LTD

A.C.N. 008 754 096                                                                                                                                                                                                                                                                                                                                           Defendant

MAGISTRATE:                                                    WHITE

DATE OF DECISION:                                         2 FEBRUARY 2017

WHERE HEARD:                                                 MELBOURNE

CASE MAY BE CITED AS:                                 LOUISE JANNET v RED ROOSTER PTY LTD

MEDIUM NEUTRAL CITATION:                     [2017] VMC056

FACTS

  1. On May 5, 2015 the plaintiff entered into a franchisee agreement with the defendant and commenced managing a Red Rooster fast food restaurant in Glenroy, Victoria.
  1. On December 17, 2015 at a Red Rooster Christmas Party, the plaintiff witnessed the Red Rooster regional manager, Nicholas Walker, singing Daryl Braithwaite’s “The Horses” while performing karaoke.
  1. Immediately after the musical performance, the plaintiff said to other guests at the function, “With a voice like that, I think he should get on some horses and ride out of here.”
  1. Shortly after, Mr Walker heard about the plaintiff’s remarks and was deeply offended as he has a particular sensitivity towards his singing abilities.
  1. The plaintiff claims that at the time of her remark she was unaware that the singer was Mr Walker and that he was the Red Rooster regional manager of the region her restaurant resides. She also claims she was unaware as to Mr Walker’s sensitivities towards his singing abilities.
  1. Subsequently, Mr Walker emailed the plaintiff demanding an apology. The plaintiff’s email reply reads:

Hi Nicholas sorry about that. It was only meant to be a joke. I see from your signature now you are actually a regional manager. Whoops!

Seriously tho have you considered taking singing lessons? :-]

  1. Mr Walker was even more deeply offended at the plaintiff’s response.
  1. The plaintiff claims that at the time of sending her email she was aware that Mr Walker was the regional manager. The plaintiff claims she was unaware as to Mr Walker’s sensitivities regarding his vocal abilities and that her response was intended as a light-hearted joke.
  1. Subsequently, Mr Walker phoned the plaintiff and demanded she sell her restaurant and leave the Red Rooster Foods company. The plaintiff refused and claimed that she was fully within her rights and that she was not breaching the franchise agreement.
  1. On July 1, 2016 the plaintiff received a bill from the defendant company for $35,123. The description of the bill reads: “Mystery shopper reimbursement.” The itemised bill shows that the Glenroy Red Rooster store was servicing 18-23 mystery shoppers each day from January 15 to June 30. The plaintiff immediately contacted the defendant via email enquiring as to the amount.
  1. Within an hour of sending the email, the plaintiff received a text message:

Hope you don’t mind the bill? We are still within our rights and are sticking to the rules of the franchise agreement. -Nicholas

  1. The plaintiff received a response from a representative of the defendant:

Hello Louise,

Thank you for contacting us.

Red Rooster reserves the right to organise mystery shoppers to shop at any stores and store owners must reimburse Red Rooster. You can refer to this in Section 5(1) of the Franchise Agreement.

The bill must be paid by August 21 or we will have the right to strip you of your ownership of the store. You can refer to this in Section 1(2) of the Franchise Agreement.

If there’s anything else I can help you with, please feel free to contact me.

Thank you and have a great day!

Kanti Jimbal

  1. The plaintiff examined the franchise agreement she signed in May 2015. The relevant section reads:

Red Rooster Foods Pty Ltd reserves the right to hire mystery shoppers for Red Rooster stores and the Franchisee agrees to reimburse Red Rooster Foods Pty Ltd for mystery shopper costs.

  1. The plaintiff responded to the defendant’s representative demanding they send no more than two mystery shoppers per week to the plaintiff’s restaurant and that she would take legal action if her demand was not met.
  1. The plaintiff paid the bill for $35,123 on August 19.
  1. On January 1, 2017 the plaintiff received another bill for $41,503. The description of the bill reads: “Mystery shopper reimbursement.” The itemised bill shows that the Glenroy Red Rooster store was servicing 21-25 mystery shoppers each day from July 1 to December 31.
  1. The plaintiff did not pay the bill and immediately sought legal advice and emailed the defendant informing Red Rooster Foods that she was planning on taking legal action. Shortly after she received a text message:

Try me! -Nicholas

  1. The plaintiff argues that the defendant’s conduct, most likely through the actions of its representative, Nicholas Walker, is unconscionable and that the defendant was breaching the implied terms and the spirit of the agreement.
  1. The defendant argues that the terms of the agreement are clear and strict and that the plaintiff must pay the mystery shopper bill.

DECISION

HIS HONOUR JUSTICE JAMES WHITE

  1. Even though Section 5(1) of the Franchise Agreement states the plaintiff must reimburse the defendant for all costs, in this case, no potential franchisee could possibly expect the company to send as many mystery shoppers as the defendant did.
  1. I also find that the representative of the defendant present when the plaintiff signed the agreement would not have intended to send as many mystery shoppers as the defendant did, nor would have the defendant at the time of drafting the agreement. Therefore, the meeting of the minds would have been met in regards to that the franchisee would reimburse costs of mystery shoppers of an amount that is reasonable and is commonly used in the industry.
  1. However, I find that the meeting of the minds was met, and that the defendant, at the time the plaintiff signed the Franchise agreement, did not intend to send as many mystery shoppers as it did, that the amount of mystery shoppers hired was a subsequent decision as a result of Mr Walker’s influence, and that the defendant intended to send as many as is commonly practiced.
  1. The plaintiff is to be refunded the money for the first bill paid on August 19, 2016 and is exempt from paying the bill sent on December 31, 2016 for $41,503. The defendant is ordered to honour a strict monetary cap of mystery shopper reimbursements towards the plaintiff for $350 annually.