10 Steps to Resolving Your Franchise Dispute

Written by: Stephanie wilson

10 Steps to Resolving Your Franchise Dispute

As published in Inside Franchise Business magazine: http://production.franchisebusiness.com.au/news/10-steps-to-resolving-your-franchise-dispute

If you are experiencing problems in your franchise relationship, you are not alone. Unfortunately, problems with your franchisor can arise in the course of your relationship or at the end. But all is not lost – here are some guidelines to help you if a dispute happens.  

Also remember – the Franchising Code of Conduct regulates how disputes should be handled and your franchise agreement may contain a complaint handling procedure. Check what procedure to follow at the outset.

If you have a dispute with your franchisor, what should you do?

Five steps to fixing a dispute

Step 1: Provide your franchisor with a written summary of what the problem is.  Tell your franchisor what outcome you want and how you think that could be achieved.  Remember, this must be in writing.

Step 2: Talk to your franchisor and try to resolve the problem. Record any resolution in writing.

Step 3: If you can’t agree on how to resolve the problem within 21 days, you can ask a mediator to be appointed. See if your franchisor agrees. A mediator is an independent person appointed to facilitate your dispute at a meeting (known as a ‘mediation’).

Step 4: If your franchisor doesn’t agree to a mediator within 21 days, you can ask the Office of the Franchising Mediation Adviser to appoint one. This is a free service. The Office also offers services prior to the mediation to assist you in the dispute and explain options available to you.

Step 5: Go to mediation. You must attend (penalties can apply in some circumstances if you do not). Unless otherwise agreed, you and the franchisor must share the costs of the mediation (including the mediator’s fees and room hire). The mediator will help you and the franchisor to negotiate an outcome that is acceptable to you both.

How can you best resolve your dispute at mediation?

Step 6: Be prepared.  Have all your paperwork ready to substantiate what you are saying.  If you are alleging the franchisor hasn’t done something it ought to, have records to prove this. Know what you are going to say well.  Practice beforehand.  Seek legal advice from a Law Firm if necessary.

Step 7: Outline your case at the start of the mediation. Have your paperwork ready to support this. Clearly explain what you want to achieve.

Step 8: Observe any obligations you have during the mediation process. This includes observing any confidentiality obligations under your franchise agreement and not providing inferior goods, services or support while the dispute is on foot. Usually mediation is confidential so you cannot disclose what was said afterwards.

Step 9: Think of alternative ways to settle the problem. In some cases, a cash settlement is sought. But more creative options might be available. Think about other options and seek advice/input from your legal advisor, accountant, business advisor, bank manager, wife/husband/partner or anyone else relevant beforehand.

Step 10: Try your best to resolve the dispute. You may need to concede some things in order to achieve a solution (but so should your franchisor). Make sure you reduce any settlement into writing. This is crucial.

More often than not, mediations result in a resolution of the dispute.  Even if no resolution is reached, it may provide a platform for further fruitful negotiations.  Remember- an ongoing dispute will only be costly, time consuming, disruptive to your business and emotionally draining on you.  So do your best to reach a resolution to your problem, if possible!

Questions?

If you have any questions about this article or would like us to assist you, please do not hesitate to contact:

Georgie Jensz, Principal
t: 
(03) 9529 4714
e:  georgie.jensz@kubedlegal.com.au
Stephanie Wilson, Lawyer
t: 
(03) 9529 4714
e: 
stephanie.wilson@kubedlegal.com.au