Scott and Jodie Gowan, who already have three Melbourne-based Sextastic Adult Variety Store franchises, said they would wait for a full council report before they "look into any legal avenue of appeal".

Casey and Cardinia councils also refused permits for the Gowans' stores in Hallam and Pakenham, but successfully appealed the decision at the Victorian Civil Administrative Tribunal.

"We don't want to go to the VCAT again. We have had no problems in Hallam and there is a karate school in the same estate."

The council's main grounds for refusal for Berwick store was that Sextastic would be two doors away from the children's play centre Funtastic Gymnastics.

The report states that the store would be contrary to the public policy principle that adult bookshops and children-related activities be separated.

The owner of Funtastic Gymnastics, one of the original objectors to the proposal, was not available for comment.

There were a further 22 objections lodged with Casey council and a petition with 138 signatories. Other issues cited were traffic problems and confusion over the names of the adult store and Funtastic Gymnastics.