5 things you
need to know
about
Franchising Disputes
- The Code outlines that a party must commence the dispute resolution process by issuing a notice of dispute to the other party. Usually, the notice of dispute must refer to the issue at hand and must include what the party requires for the dispute to be rectified. Any dispute with a third party should be dealt with separately from the franchising dispute resolution process.
- If the parties fail to resolve the dispute internally, either party may refer the dispute to an ADR process, which means mediation, arbitration or conciliation. This process involves a third party, an ADR practitioner, assisting the parties in reaching a resolution.
- If two or more franchisees have similar disputes with the franchisor, they may commence the dispute resolution process jointly to resolve their franchising disputes.
- There are several alternative options to ADR, including arbitration and litigation. Arbitration involves the parties presenting evidence, and the arbitrator makes a binding determination on the dispute. Parties may also commence legal action, which is usually appropriate where a party requires urgent relief. Obtaining legal advice before commencing litigation concerning the dispute is strongly recommended.
- The Code allows both the franchisee and franchisor to terminate their relationship. Your Franchise Agreement should outline these rights, which can include an early termination request by the franchisee, an allegation of breach by the franchisor, and in certain circumstances such as fraud, insolvency, and endangering public safety.
