Legal Matters

last updated 02/02/2022

No jabs franchisee loses business

last updated 02/02/2022

27 January 2022 – A franchisee which advertised for unvaccinated staff despite the mandatory requirement for hospitality staff to be vaccinated has left the business after being fined $24,000 for breaching the mandate. The franchisor reportedly gave them 10 days to comply or leave

Damned Fine Food, which operates Lone Star New Lynn, was issued by WorkSafe with two infringement notices on 21 January and fines for breaches of the vaccination mandate after advertising on a ‘no jab jobs’ website, saying their restaurant ‘will not be discriminating either whilst employing or serving our guests.’ The advertisement attracted a lot of media attention, and was removed after four days. 

However, the restaurant was then investigated and received the two notices: ‘One for allowing unvaccinated staff to carry out work when required to be vaccinated and the other for not having effective systems and processes to check Covid-19 Vaccine Certificate (CVC) compliance,’ a WorkSafe spokesman told Stuff. Each has an associated penalty of $12,000.

The Lone Star franchisor company expressed a strong commitment to following the requirements of the Covid-19 Protection Framework, and this was acknowledged by WorkSafe.

Grounds for termination

Most franchise agreements include clauses requiring the franchisee to observe and comply with the laws of New Zealand. Failure to observe these laws constitutes a serious breach of the agreement and may be grounds for termination.

A few years ago, a small spate of employment breaches saw some individual franchisees found guilty of not following employment law relating to minimum wages and holiday pay. In many of these cases, the franchisee companies were not only fined under the law, but also had their franchise agreements terminated by the franchisor and lost their businesses. Such terminations were justified both to protect the brand itself and the reputations and investments of other law-abiding franchisees. It appears that deliberate failure to follow vaccination mandates may result in similar actions.

Meeting the mandate

The past two years have been tough for many in the hospitality sector, especially in Auckland with its recurring lockdowns. The move to the Traffic Light system and the vaccination mandate were designed to set clear guidelines, which were generally welcomed by franchisors in mandated sectors, and they have provided practical advice and guidance to franchisees. Under the Red setting, restaurants can serve up to 100 people seated with 1m distancing.

Stuff reported that the Lone Star franchisor had given Damned Fine Food 10 days to comply with the mandate, but that they had chosen not to do so. In a video, one of the Damned Fine Food franchisees, Stephanie Pascoe, said they were ‘prepared to make a stand against the Government.’ 

Sadly, the case illustrates the line that needs to be drawn between private beliefs and public behaviour when representing a franchise brand. Where a franchisee breaks the law, and especially when it does so knowingly, it may invite wider consequences than those imposed under the law itself.

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