Franchise Disputes

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Resolving Franchise Disputes.

One of the good things about the Franchising Code of Conduct is that it provides a mechanism for resolving franchise disputes.

The Code states that a franchise agreement must provide for a complaint handling procedure that complies with the Code.

A party to a franchise agreement who has a dispute with another party to the agreement may:-

  1. take action under the agreement’s complaint handling procedure; or
  2. take action in accordance with Division 3 of Part 4 of the Code.

That part of the Code sets out the steps as follows:-

The Complainant (the person complaining) must tell the Respondent (the other party) in writing:-

  1. the nature of the dispute; and
  2. what outcome they want; and
  3. what action the complainant thinks will resolve the dispute.

The parties should then try and agree about how to resolve the dispute – this could involve trying to resolve things by going into print, having a meeting or talking about the issues by phone.

If the parties cannot agree how to resolve the dispute within 3 weeks, either party may refer the matter to mediation either under the Agreement or the Code.

This puts a timeframe in place and obliges the parties to discuss the choice of mediator and venue etc.

Usually the parties share the costs of the mediation and agree on a venue suitable to both parties.

Some of the great things about resolving a franchise dispute through mediation are:-

  1. there is an independent mediator who can facilitate the parties constructively discussing the issues and exploring all options for a solution to the dispute;
  2. each party has the opportunity to eye ball the other party (in a controlled environment) and really express their issues in a very effective and meaningful way;
  3. the options for a solution are unlimited – the parties with the help of the mediator can craft solutions that are creative and unlikely to be available if the dispute were to proceed to litigation and be heard by a judge;
  4. a successful mediation means a huge cost saving for both parties if litigation is avoided including the significant expense, the time involved, the angst and stress involved in litigation and perhaps very importantly loosing focus on the business whilst the litigation is on foot.

So if you are involved in a franchise dispute as a Franchisor or Franchisee, consider mediation.

Feel free to contact us and discuss your legal needs obligation free to see if we can assist you in resolving your franchise dispute and get you back to putting your energy into where it should be –  in your business.

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The content published in this Blog is in the form of academic papers and the opinions expressed herein are generalised. The information provided is for educational purposes, not specific legal advice.

The application of any principles referred to can alter from case to case and accordingly you should seek independent legal advice in respect of your individual circumstances.


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