Franchising disputes, by their nature, are expensive and often involve a David vs Goliath battle. The rich franchisor seeks to enforce their contractual rights against the not-so-rich franchisee, who has a legitimate claim based on certain conduct of the franchisor, but just doesn’t have the funds for the fancy lawyers to present that claim in Court.

Given the cost and time commitment involved with franchising, it’s not surprising that the claims for damages in such proceedings usually amount to the hundreds of thousands of dollars and take months, sometimes even years, to resolve.

What to do if you disagree with the other party

If you’re a franchisee or franchisor who has a gripe with the other party, you should be careful about how that issue is raised and the steps you take. The Franchising Code of Conduct (the Code) is prescriptive as to the relevant dispute resolution procedure, and you are likely to be governed by strict contractual terms that you signed and agreed to back when the franchise agreement was entered into.

Here is some practical tips for avoiding the long, costly saga that is franchise litigation:

  1. Look at your franchise agreement – figure out what the relevant contractual rights and obligations are that relate to the issue in dispute;
  2. Understand the dispute resolution procedure under the Code;
  3. Articulate your issues clearly and provide a clearly defined resolution – when notifying the other party of the breach, either by way of a formal dispute/ breach notice issued per the Code or otherwise, be clear about what your issue is, why, what should be done to rectify it, and when;
  4. Talk to a lawyer – a franchise lawyer with knowledge of the Code and applicable case law, and the ability to interpret your franchise agreement and ancillary documents, will provide valuable insight into your legal rights and obligations, and practical steps as to how to resolve them;
  5. Take advantage of mediation or alternate dispute resolution procedures – generally, success rates of mediation in the franchising sphere are very good, and save the disputing parties from a great deal of time and costs battling it out in Court.

Conclusion

If you are a franchisor or franchisee with a genuine dispute against the other party, it’s best to talk to a franchise lawyer at the outset to get a clear understanding of the applicable law and develop a game plan to deal with the dispute. LegalVision has a team of franchise lawyers with decades of experience assisting clients in disputes with the other party. If you are one of these parties and need legal support going forward, get in touch and enjoy an obligation-free consultation and fixed-fee quote.  Give us a call on 1300 544 755 and have a chat with our Client Care team.

Emma Jervis

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