The recent decision in Health & Case Management Limited v The Physiotherapy Network Limited [2018] highlights the importance of ensuring that an express good faith clause is included in a franchise agreement in order to offer protection for breaches of good faith and other agreed terms.

As a franchisor, it is important to ensure that the franchise agreement includes a good faith clause so that there is protection against the franchisee acting in a way which fundamentally undermines their performance of the contract.

As a franchisee, it is vital to identify any good faith provisions and understand how they affect your performance of the agreement in terms of restricting your actions. It is also advisable to ensure that any good faith clauses also require the franchisor to act in good faith, so that the franchisee is offered some protection against the franchisor acting in a manner which is not faithful to the parties' common purpose.