When Hungry Jack’s distributed more than 27,000 Garfield toys with kids’ meals, they didn’t expect a fine. But a missing warning label — specifically about the button batteries inside those toys — resulted in a $150,240 penalty from the ACCC for breaching Australian Consumer Law. The toys otherwise met national safety standards, but that single omission turned a clever campaign into a costly compliance failure.
This is not just a headline — it’s a warning to all franchisors.
At Magnolia Legal, we often say that almost every operational decision in a franchise system is governed by law. The Hungry Jack’s case illustrates this perfectly: a toy, a meal deal, a marketing rollout — all seemingly low-risk actions that sit squarely within the reach of extensive legal and regulatory requirements.
1. Toys and Product Safety: It’s More Than Just the Standard
Yes, the Garfield toys complied with the safety standard. But that didn’t matter. Because under the mandatory button battery safety laws introduced in 2022, labelling and consumer warnings are not optional — they are integral. When those warnings were left off, the campaign crossed a legal line.
For franchisors, this is a powerful reminder: product compliance goes beyond what’s inside the packaging. It includes what the packaging says — or doesn’t say. Failing to get this right can have financial, reputational, and legal consequences, particularly if injury or loss occurs.
2. Labelling and Packaging: A Moving Legal Target
The regulations that apply to promotional items, food products, packaging, and advertising are not static. They change, they tighten, and they increasingly demand that businesses take a proactive role in protecting consumers.
From allergens and choking hazards to language clarity and age warnings, your packaging is a legal document as much as a marketing tool. Franchisors must ensure that suppliers, designers, and franchisees are all working from legally vetted templates that are up-to-date and compliant — every time.
3. The Hidden Risks Behind Promotions
Whether you’re rolling out a “collect them all” campaign or bundling meals with toys or other items, it’s critical to view these activities through a compliance lens. Will the promotion change how food is packaged or stored? Does it trigger additional kilojoule labelling requirements? Is it encouraging nutritional claims like “healthier” or “natural” without scientific backing?
These are not hypothetical risks — they’re real-world compliance traps that can expose franchisors to investigation, fines, or litigation.
4. Franchise Systems Mean Shared Responsibility
One of the less obvious risks for franchisors is how quickly liability can flow across their network. Even if a franchisee is distributing a non-compliant item, if it’s under your brand, using your IP, and provided via your supply chain, regulators will often look to the franchisor for accountability.
This is why it’s essential that franchisors implement robust, documented systems for compliance — and that those systems are updated and enforced consistently across the network.
5. The Legal Checklist Before You Launch Anything
Here’s what franchisors should be doing before launching any campaign, product, or change in operational procedure:
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Legal review of all products and promotional materials, including toys, packaging, and labelling.
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Assessment of any nutritional or advertising claims against the Food Standards Code and ACL.
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Verification of compliance with food safety standards if the change affects how food is stored, served, or bundled.
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Updated safety inspections if in-store elements like play equipment are likely to see increased use.
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Training and briefing for franchisees to ensure consistent understanding and execution.
One Misstep Can Undermine a Brand
The Hungry Jack’s case wasn’t about a rogue franchisee or a deliberate breach. It was about a gap in process — one missed compliance check in an otherwise successful marketing campaign. But that single gap cost six figures and made national headlines.
For franchisors, the takeaway is clear: the law governs far more than you think, and your operations team needs to plan every rollout hand-in-hand with legal.
At Magnolia Legal, we specialise in helping franchise systems design legally sound operations, campaigns, and compliance programs. We don’t just help you launch — we help you protect what you’ve built.
If you’re planning a campaign, making an operational change, or just haven’t reviewed your compliance systems in a while — let’s talk.