The consequences of making mistakes when issuing notices,
whether under a franchise agreement or lease, can be substantial. A
recent decision of the New South Wales Administrative Decisions
Tribunal emphasised this point when a franchisor was found not to
have validly exercised an option for a further term under a
In Almaron Pty Ltd v Jonamill Pty Ltd, the landlord let
premises to a franchisor tenant for five years, with an option for
a further five years. As is typically the case, the option could be
exercised by giving notice in writing sent by registered post to
the landlord's address in the lease, or a new address notified
by the landlord. The landlord sent the franchisor a letter in March
2007 notifying a new address, but did not refer in that letter to
the lease or the premises. Some months later, when attempting to
exercise the option for a further term, the franchisor sent a
letter by ordinary post to the old address of the landlord.
The Tribunal had to decide whether the franchisor's notice
was validly given pursuant to the lease, and whether the landlord
had properly notified the change of address. The franchisor
complained that the landlord's letter purporting to notify a
new address was too vague and non specific and did not constitute
an appropriate notice. This argument was rejected by the Tribunal
having regard to all of the circumstances, finding that a
reasonable recipient in the position of the franchisor (which had
over 350 retail shop premises under lease) would consider that the
landlord, by sending the letter, wished to notify the franchisor
that all further communications should be sent to the new
The Tribunal also found that the franchisor's failure to
send the letter seeking to exercise the option by registered post
(it was sent by ordinary post) disentitled the franchisor from the
benefit of the deeming effect of the notice provision in the lease.
The option to renew was not validly exercised and the lease
terminated at the end of the term.
When drafting notices, care must be taken with both the
substantive and mechanical aspects of the notice. While the
relevant notice provision should be read carefully, the
draftsperson should also consider whether there are any other
documents that might affect the notice such as a letter changing
the address for service. In this respect, notices should be given
by as many means as possible –email, post (both to the
address in the agreement and any new address known to the person
giving the notice), fax and hand delivery are standard forms of
serving notices that should at least be considered in every case.
It is better to issue extra notices and make sure of service than
not enough and to become embroiled in a dispute about whether
notice was or was not given.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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