The 85 Degrees Coffee bakery chain franchisor has copped a $1.44 million fine for “systematic failure to ensure compliance within its franchise network”.

This is the third highest fine secured by the Fair Work Ombudsman.

The landmark case is the first instance of the FWO using the responsible franchisor entity provisions of Protecting Vulnerable Workers reforms. These provisions hold a franchisor accountable for the conduct of its franchisees...

The court found that while 85 Degrees did not directly underpay the workers, it is legally liable for the franchisees’ actions. The court found it should reasonably have known, and from 1 April 2019 did know, its franchisees would commit underpayment, record-keeping and pay slip contraventions, and failed to take reasonable preventive steps...

Justice Robert Bromwich found “85 Degrees does not, and could not, dispute the FWO’s accurate assertion that the facts demonstrate a systematic failure to ensure compliance within its franchise network.”

Justice Bromwich said 85 Degrees has now “abandoned its business in Australia and is unlikely to resume that business”...

Fair Work Ombudsman Anna Booth said “85 Degrees’ conduct in this matter was completely unacceptable. The company had been on notice for some time about compliance issues in its network but failed to take reasonable steps as a responsible franchisor to address those issues...