MATTHEWS & MATTHEWS

The Full Federal Court heard an appeal in *Matthews & Matthews* concerning a dispute between the parties regarding the interpretation and application of certain provisions within a franchise agreement. The core of the disagreement revolved around the respondent's entitlement to a share of profits generated by a related entity, which the appellant argued was not covered by the franchise agreement.

The primary legal issues before the Full Federal Court were: (1) whether the respondent was entitled to a share of profits from the related entity under the terms of the franchise agreement, and (2) if not, whether the respondent had established a claim for equitable compensation or an account of profits based on a breach of fiduciary duty or a constructive trust. The court was required to construe the franchise agreement and consider the nature of the relationship between the parties and the related entity.

The Full Federal Court found that the franchise agreement did not grant the respondent a right to share in the profits of the related entity. The court analysed the express terms of the agreement and concluded that the scope of the profit-sharing provisions was confined to profits generated directly by the franchised business. Furthermore, the court determined that the appellant had not breached any fiduciary duties owed to the respondent, nor had the circumstances given rise to a constructive trust over the profits of the related entity. The court reasoned that the appellant had acted within its rights under the franchise agreement and that the respondent had not demonstrated the necessary elements for equitable relief.