Mediating a franchise dispute under the Franchising Code of Conduct
The Franchising Code of Conduct requires parties to a franchise agreement to attempt to resolve disputes through an internal process before proceeding to mediation. If internal resolution is unsuccessful, either party can refer the dispute to a mediator appointed through the Office of the Franchising Mediation Adviser (OFMA).
This is an 8-step workflow for resolving a franchise dispute through the mandatory mediation process under the Franchising Code of Conduct (Schedule 1 to the Competition and Consumer (Industry Codes — Franchising) Regulation 2014).
Before you start
- A copy of the franchise agreement and disclosure document
- The nature of the dispute clearly identified
- Internal dispute resolution attempted or the 30-day period expired
- Client objectives and settlement authority established
The workflow
Serve an internal dispute notice
Serve a written notice on the other party identifying the nature of the dispute, the outcome sought, and a proposed resolution. The Code requires the parties to attempt to resolve the dispute internally within 30 days before proceeding to mediation.
Attempt internal resolution
Engage in good faith discussions with the other party during the 30-day internal resolution period. Document all communications and offers. If a resolution is reached, record it in writing and have both parties sign.
Refer the dispute to OFMA
If internal resolution is unsuccessful, either party may refer the dispute to the Office of the Franchising Mediation Adviser (OFMA). Complete the OFMA referral form and pay the applicable fee.
Appoint the mediator
OFMA will appoint an accredited mediator unless the parties agree on a mediator within a specified period. Confirm the mediator's availability, fees (shared equally unless otherwise agreed), and the mediation venue.
Prepare a mediation position statement
Draft a concise position statement setting out the facts, the legal issues, the remedy sought, and the client's negotiating position. Include copies of key documents — the franchise agreement, relevant correspondence, and financial records if the dispute involves money.
Attend the mediation
Attend the mediation with the client (who must have authority to settle). Participate in good faith — the Code requires both parties to attend and make a genuine effort to resolve the dispute. The mediator will facilitate joint sessions and private caucuses.
Document the mediation outcome
If the dispute is resolved, record the agreement in a binding settlement deed signed at mediation. If the dispute is not resolved, obtain a certificate from the mediator confirming that mediation has been attempted, which may be required before commencing court proceedings.
Implement the settlement or escalate
If settled, implement the agreed terms — amend the franchise agreement, pay any sums, or adjust operational requirements. If not settled, advise the client on next steps: arbitration (if the agreement provides for it), ACCC complaint, or Federal Court proceedings.
What you will have at the end
A mediated resolution documented in a binding settlement deed, or a mediator's certificate enabling escalation to court or arbitration.
Common issues
- Skipping the 30-day internal dispute resolution step, which is a mandatory precondition
- Attending mediation without settlement authority, wasting the session
- Not documenting the settlement in a binding deed at the mediation itself
- Overlooking the franchisor's obligation not to terminate the agreement while the dispute process is on foot
- Failing to preserve evidence of good faith participation for any later court proceedings
Run this workflow on a real matter
Quillio analyses franchise agreements against the Franchising Code, drafts dispute notices, and prepares mediation position statements. See /practice-areas/commercial-lawyers or start a free trial.
This workflow is a general guide. The Franchising Code is amended periodically — always verify against the current version of the Code and any ACCC guidance.
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