The Franchising Code of Conduct (the Code) now prescribes disputing parties to a Franchise Agreement undertake a mediation before commencing proceedings. The Office of Franchising Mediation Association (OFMA) is often engaged in administering such mediation processes, assigning qualified mediators to the dispute and providing information to franchisors and franchisees on precisely what the process will entail.
If you are party to a franchise agreement and have had your dispute set down for mediation, you should first undertake some important steps to maximise your chances of obtaining a favourable outcome.
1. Obtain Advice
It’s essential that you know your legal rights and obligations and any potential areas of risk so as to articulate your case on the day and undertake a commercial analysis of the situation.
2. Undertake a ‘Best Case/Worst Case’ Analysis
Sometimes, simply writing down the worst possible outcome, weighing up the remedy/damages sought against the potential loss of the franchise business and ancillary costs (such as legal) can be a real eye-opening experience. Doing so enables you to ask, “if everything goes against me, can I afford the consequences?” A franchise lawyer can assist you here, and should be able to provide invaluable advice on where you sit on the spectrum of best to worst case.
3. Review Your Documents
Many franchise disputes have turned on a few words within the Franchise Agreement, or contained in communications between the parties. Before attending the mediation, you should obtain copies and review all relevant documents, and order them in a way that is logical and best supports your case. It may also be helpful to provide the other party with any key documents or communications you are relying on before the mediation.
4. Articulate What You Want
It’s hard to negotiate an outcome when you don’t know what you want exactly. Before heading to the mediation, take a moment to note what orders or outcomes you would seek should the mediation fail and the matter proceed to court. While mediation, by its nature, involves an element of compromise, it’s helpful for each party to articulate what they want at the outset.
5. Make Sure the Right People Attend
If you operate, either as a franchisee or franchisor, through a corporate vehicle, including a trust or Pty. Ltd. company, you should ensure a person attends the mediation who is authorised to settle the matter on that company’s behalf. If you are an employee, you should make sure that before the mediation, you have authority to settle up to $X, or that a person with authority to make such decisions will be on hand and available via phone to consider proposed offers.
6. Be On Time
It should go without saying but on the day, you should dress professionally, be organised, and be on time. Switch your mobile phone off and unless the mediator expressed something contrary previously, you should set aside the entire day for the mediation.
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Following these steps should assist you to maximise the prospects of a settlement, and ensure the day runs smoothly. After all that preparation, the mediation itself will occur. You can read about what happens at a franchise mediation in our next article. In the meantime, if you have any questions, get in touch with our franchise team on 1300 544 755.