Virk Pty Ltd (in liq) v YUM! Restaurants Australia Pty Ltd

The appeal was brought by Virk Pty Ltd (in liquidation) against YUM! Restaurants Australia Pty Ltd, concerning the interpretation and enforcement of a franchise agreement. The dispute primarily revolved around the franchisor's exercise of its power to set maximum prices for products and whether this was done in good faith and reasonably. The court was tasked with determining whether the franchisor owed a duty of care to the franchisees in exercising this power and if there was any obligation to ensure that franchisees could make, maintain, or increase profits. Additionally, the court examined whether the franchisor engaged in unconscionable conduct under consumer law by setting these maximum prices.

The court addressed the scope of the duty of good faith and reasonableness, determining whether the franchisor was required to act reasonably in an objective sense when exercising discretionary pricing powers. The court also evaluated whether the franchisor owed a duty of care to franchisees in exercising the power to set maximum prices. Furthermore, the court assessed if there was an obligation on the franchisor to ensure that franchisees could make, maintain, or increase profits through the exercise of this power. Finally, the court considered whether the franchisor's conduct in setting maximum prices constituted unconscionable conduct under consumer law.

The court concluded that the franchisor was not required to act in an objective sense when exercising discretionary pricing powers, but rather in a manner consistent with the franchise agreement and good faith. The court found that the franchisor did not owe a duty of care to franchisees in exercising the power to set maximum prices. Additionally, the court determined that there was no obligation on the franchisor to ensure that franchisees could make, maintain, or increase profits. The court also held that the franchisor's conduct in setting maximum prices did not amount to unconscionable conduct under consumer law.

The appeal was dismissed, and the appellant was ordered to pay the respondent’s costs of the appeal. There was liberty to apply for further orders if necessary.