The Fair Work Ombudsman is taking franchisor 85 Degrees to court in a landmark case that franchisors will watch closely.

The legal proceedings relate to alleged underpayments by franchisees and it is the first time the FWO has lodged such a case.

FWO alleges that 85 Degrees was liable as a “responsible franchisor entity” under the Fair Work Act for alleged non-compliance by eight franchisee-operated outlets in Sydney in 2019.

It argues the franchisor is legally liable because it should reasonably have known its franchisees would underpay the workers or commit similar contraventions...

Between January 1 and December 31, 2019, nine workers were allegedly underpaid minimum rates, overtime entitlements, annual leave entitlements, penalty rates for weekend, public holiday and evening work. Individual underpayments ranged from $239 to $15,198.

The FWO discovered the alleged underpayments, pay slips, and record-keeping breaches when it conducted proactive audits....