Ordered to pay ongoing Green Acres franchise fees for their remaining twenty year franchise term, franchisees Palwinder Singh and Harmandip Singh cancelled their Wellington commercial cleaning franchises without justification after one year.
The High Court was told the two signed up in 2024, guaranteeing performance of two Green Acres franchises taken out in names of their separate companies.
They claimed Green Acres failed to refer supposedly promised ongoing work.
Green Acres Franchise Group Ltd provides business platforms for small business operations. Franchisees commit to paying royalty fees and brand levies.
Each cancelled their respective company’s franchise agreement after complaining there was no justification for ongoing fees when business turnover did not reach guaranteed levels of some $1500 per week.
Associate Judge Lester ruled Green Acres was under no obligation to provide guaranteed work from day one. It was up to both Green Acres as franchisor and the Singhs as franchisees to source work.
Their agreements required Green Acres to provide compensation after two years if turnover had not reached guaranteed levels by that date.
This guarantee did not apply on cancellation within these two years, he said.
The Singhs two companies’ supposed cancellations were invalid, amounting to a wrongful repudiation of their franchise contracts, Judge Lester ruled.
As guarantors, they were liable.
Palwinder Singh was ordered to pay some $97,000: the present day value of fees due for the balance of his twenty year franchise contract. Ongoing payments would have been $187.50 for weekly royalties, $25 monthly as brand levies.
Harmand Singh was ordered to pay $62,800 for ongoing unpaid royalties, based on contracted royalties of $125 per week.
Green Acres claim against Harmand Singh for unpaid brand levies requires further evidence, Judge Lester said.
For Harmand Singh’s business, brand levies are calculated as a percentage of future gross monthly sales; an impossible calculation with business operations now terminated.
Green Acres Franchise Group Ltd v. Singh – High Court (13.08.26)
26.228