Turnover guarantee only applied after two years, not from day one
The High Court found that two cleaning franchisees who cancelled over an unmet turnover guarantee had themselves broken the deal, leaving them liable for damages.
In Green Acres Franchise Group Limited v Manjit Corporation Limited [2026] NZHC 2375, the High Court granted summary judgment for the franchisor, Green Acres Franchise Group Limited (Green Acres), against two Wellington franchisees and their personal guarantors. The court delivered its decision on 13 August 2026.
The franchisees signed near-identical 20-year agreements in early 2024 to run home and commercial cleaning businesses under the Green Acres system. Each paid a fixed weekly royalty and monthly brand levy, and each was backed by a personal guarantee.
In November 2025, the franchisees cancelled for breach, arguing that Green Acres had failed to deliver a guaranteed weekly turnover of $1,500 per week in one case and that the contracts required Green Acres to keep referring enough work to reach that figure.
The court rejected that reading. It found the turnover guarantee was tested only after two years, when Green Acres would owe a top-up payment if the average weekly income fell short and the franchisees had met their own obligations to find work. The court held that Green Acres had no continuing duty to refer a minimum amount of work, since the guarantee would serve no purpose if it did. The agreements supplied no customer list and no guaranteed work from the outset.
Because the cancellation rested on an obligation the court found did not exist, the court held that the franchisees' notices were invalid and amounted to repudiation, meaning that they walked away from a contract that still bound them. Green Acres kept the agreements alive, asked the franchisees to confirm they would perform, and cancelled on 15 December 2025 when no confirmation came.
The court awarded Green Acres the value of the royalties and levies it would have collected over the balance of each 20-year term. An unchallenged accountant discounted that future income to a present-day figure at 10 percent. The court entered judgment of $97,123.95, including GST, against one franchisee and its guarantor, and $62,894.55 against the other.
The court declined to award a further $12,521.12 in brand levy tied to gross monthly sales, finding that figure too variable to treat as fixed, and allowed further evidence on that amount.
