With no agreement on renewal of a franchise agreement, franchisor Cleanco Truck Wash failed in attempts to stop former franchise holder Waikato Truck Wash carrying on business in Hamilton as an independent operator, contrary to their agreed restraint of trade. If it is proved Waikato Truck is in the wrong, damages are an adequate remedy Justice Robinson ruled in the High Court.
Their 2014 ten-year franchise agreement required Waikato Truck Wash pay royalties calculated at five per cent of gross sales. For the period 2021-23 royalty payments had been between $58,000 and $69,000 the High Court was told.
Evidence was given of a falling out when the franchise came up for renewal in 2024.
Richard Vincent is sole director and his family trust shareholder of franchisor Cleanco Truck Wash Systems Ltd.
In 2024, Gregory McQuaid’s Waikato Truck Wash Ltd gave written notice renewing its Cleanco franchise for a further ten years.
Nothing was finalised. Waikato Truck claims renewal terms are unacceptable; in breach of their original franchise agreement stating that any renewal would not make any fundamental changes, Mr McQuaid claims.
After fruitless negotiations, the franchise was terminated. Cleanco sued to enforce a restraint of trade prohibiting Waikato Trust from continuing in business from its Hamilton site for a two year period.
Gloves came off in the High Court.
Mr McQuaid argued the franchise agreement was no more than a licensing arrangement allowing use of Cleanco’s name and logo. Waikato Truck is free to operate as an independent business on removal of the signage, he argues.
Cleanco claims the 110 page contract signed by Waikato Truck sets out in detail the business system owned by Cleanco and used by Waikato Truck. The two year restraint of trade is a reasonable protection of its intellectual property rights, it claims.
In the High Court, Justice Robinson declined to immediately enforce the restraint.
Yet to be resolved is their legal dispute over validity of terms offered for a further renewal of the Cleanco franchise; a legal question of whether Cleanco or Waikato Truck were in the wrong.
If there is a final ruling against Waikato Truck, damages are an adequate remedy Justice Robinson ruled. Calculation is not difficult; five per cent of ongoing gross revenue.
Separately, Cleanco sued to block Waikato Truck’s Crawford Street site being used as a truck wash.
This was dismissed.
The site is owned by G-Field Properties Ltd, also controlled by Waikato Truck’s Mr McQuaid.
G-Field did not sign any franchise agreement.
Evidence was given of Mr McQuaid’s G-Field buying Crawford Street from interests associated with Mr Vincent back in 2014 when their franchise agreement was first signed.
This contract gave Mr Vincent right of first refusal to buy back Crawford Street from G-Field during the next ten years.
The court was told Mr McQuaid offered to sell the site back to Mr Vincent some three months before making his written request to renew the franchise.
Mr Vincent did not take up the offer. The option has since lapsed.
Cleanco Truck Wash Systems Ltd v. Waikato Truck Wash Ltd – High Court (1.04.26)
26.123