KFC franchisee and Yum! Restaurants in legal showdown

Sarah Stowe


Australia’s best known franchisee, Jack Cowin, plans to take legal action against his KFC franchisor, Yum! Restaurants Australia for what he considers unconscionable conduct.

Cowin’s company Competitive Foods has been in a battle with Yum! since the franchisor gave notice in 2003 that his longstanding franchise agreements in WA and NT would not be renewed and the Rockingham store closed in 2007.

Over the last two years extensions to the agreements were granted by Yum to allow the businesses to be sold to new franchisees.

However Cowin has questioned the franchisor’s actions in effectively terminating a successful franchise business and is now taking the issue to court.

There is an injunction hearing in Sydney’s Federal Court on Monday 26 March and Competitive Foods hopes the result will be negotiations back on track.

A spokesperson for Competitive Foods told Franchising magazine, The fundamental issue is one that faces franchisees around Australia. We are a company that is very high profile example of where the franchisor has not acted appropriately towards us. It’s a clear example of opportunistic behaviour.

Competitive Foods now has 15 out of 46 stores out of licence and according to the spokesperson, the stores have been granted extensions on a monthly basis.

This has been detrimental to business, the spokesperson said. We hope that the court accepts our proposition. If it’s not supported, then theoretically the stores will be closed. That would be unprecedented.

Yum! Restaurants Australia’s chief corporate affairs officer, Sally Glover said “We entirely reject the allegations being made by Competitive Foods in this case – the claims being made are baseless and without merit.

Indeed much of what is being alleged is so far-fetched that it bears no relation to the true position.

We intend to contest the claims vigorously in the court proceedings and look forward to this long-running matter finally being resolved.”

Issue of regulation

The issue of whether or not good faith should be encased in franchising legislation has been ongoing; the Federal Government has rejected the idea and this was subsequently take up in various state parliaments including WA and SA.

The spokesperson for Competitive Foods said the franchisor has been emboldened by the provision of good faith not getting up. We have the resources to take this on but lots of franchisees would have packed up and left.

We would accept most franchisees and franchisors have a very positive relationship. But we’re a high profile case, and there are other cases in Sydney.

Competitive Foods operates a number of businesses including Hungry Jacks stores, and KFC restaurants in WA and NT. Cowin has been a vocal supporter of state-based legislation and the inclusion of a good faith clause in franchising regulation.

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