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Resolving franchise disputes.
Any conflict between partners will only sour that relationship and the promise of joint profit.
In the current market conditions created by social distancing related to COVID-19 measures, a number franchisors are starting to offer internet services that are in competition with those provided by their franchisees. Some franchisees have reported that they believe that their franchisor are not acting in “good faith”. The ACCC have advised that:
“There is a requirement in the Franchising Code for both franchisors and franchisees to act in good faith. The good faith obligation includes acting honestly, co-operatively, and with due regard to the rights and interests of the other party, but does not prevent a party from acting in their own legitimate commercial interests.”
Code of Conduct
Franchising conflict that remains unresolved can eventually lead to a breakdown and separation. Like any divorce, this will be a difficult, painful and expensive experience.
That is why from 20 years ago the government established a legally binding, Code of Conduct that franchisees and franchisors are required to comply with; separate from their contractual obligations under their Franchise Agreement.
Since 2015, the Code has also required franchise partners to act in “good faith” in relation to complying with these requirements.
This is an obligation which exceeds those normally imposed upon parties in commercial relationships. This is therefore an important and powerful obligation that can be relied on by the parties.
If you are in a franchise and have a complaint or conflict with your franchise partner we can help you to get the dispute resolved FAST so your business relationship is back on course.
If other franchisees are also involved in the same issue we can assist ALL Franchisees with the conduct of a MULTI-PARTY mediation.
Notice of Dispute
To use the Federal Government’s Franchising Code of Conduct you must send a Notice of Dispute to the other party.
A lot of franchisees think, well I am not in a dispute, I am just asking the franchisor to change what they are doing. Do not be concerned about the description of the process. This is the Code description of engaging collaboratively with your franchisor to resolve the issues freely, completely and inexpensively.
You can use our NOTICE OF DISPUTE generator to prepare your Notice now on-line, electronically sign it, attach your documents and we will automatically mail it to the parties you nominate and then send you a confirmation copy – for FREE.
Franchisors are under no general obligation to reply to emails of complaint from their franchisees and often they don’t. Franchisees report waiting months for a reply that never comes.
However, once a franchisee sends their franchisor a Notice of Dispute the franchisor is under a legal obligation to negotiate in good faith to try to resolve the dispute by over the next 21 days. Further, any disruptive action that has been threatened, should be put on hold.
MEDIATION BY VIDEO-CONFERENCE
The COVID-19 pandemic is keeping people from travelling, meeting and mediating.
But NOT us. We have been planning a transition to Mediating by Video for over a year.
We are now live with ZOOM video-conferencing all over Australia.
If you need a mediation - click the link above to START NOW.
With GMH announcement that the company will be leaving Australia and ending the Holden brand, there has been a lot of news this week about Holden dealers seeking government assistance.
Car dealers are covered by the Code of Conduct.
The Franchising Code of Conduct expressly provides that a motor vehicle dealership agreement is taken to be a franchise agreement and hence covered by the Code.
What is a Motor Vehicle dealership?
The Code defines it as “a business of buying, selling, exchanging or leasing motor vehicles that is conducted by a person other than a person who is only involved as a credit provider, or provider of other financial services, in the purchase, sale, exchange or lease.“
Motor vehicles are given a precise definition as “a vehicle that uses, or is designed to use, volatile spirit, gas, oil, electricity or any other power as the principal means of propulsion.“
The Code even provides a detailed list of examples of what is a motor vehicle, including: motor cars, motorcycles, motor boats, tractors, motorised farm machinery, motorised construction machinery and even aircraft.
What help is available? Individual dealers can immediately lodge a Notice of dispute and require Holden to negotiate and mediate any offer they have been given, legally “in good faith”.
Can dealers join together?
Rather than having separate mediations, can dealers join together and have a mediation over the single issue of the method of calculating fair compensation? The ACCC recommended they should be able to do so, at the recent Senate Inquiry.
What about an adjudicated decision?
The Senate Inquiry strongly recommended that the Code be amended to allow the option of binding arbitration with the capacity to award “remedies, compensation, interest and costs” if mediation is unsuccessful.
The government could assist ALL franchisees by immediately legislating to bring in these reforms to the Code that have been recommended by the Senate committee of inquiry.
Franchising Dispute Resolver
Derek Minus is the Franchising Dispute Resolver.
He can help to resolve your Franchise dispute NOW.
As the former Commonwealth government mediation Adviser for the franchising industry, he assisted hundreds of franchise partners resolve their disputes.
As a barrister, accredited mediator and chartered arbitrator, he knows how the Franchising Code works and has the skills to personally assist you.
Services are provided at the same rate specified by the Commonwealth Government of $300 per hour (plus GST). Under the Code, each party is required to pay half the fees.
Service and Support Conflict that can affect your livelihood and value of your franchise can be stressful. We provide the facilities and personal support to get you into resolution quickly.
Need a conciliated agreement? He can be nominated or call upon over 100 mediators Australia-wide who he can refer for appointment by the parties to conduct the mediation of your dispute.
Want an adjudicated decision? With the agreement of the parties the expense and delay of the court system can be avoided with a private arbitration.
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The Franchising Code has a 3-STEP resolution process
Start the Resolution Process
Under the Code, a party raising a dispute (the franchisee or franchisor) must notify the other party in writing, by sending them a Notice of Dispute setting out:
(a) the nature of the dispute; and
(b) what action the complainant thinks will settle the dispute; and
(c) what outcome the complainant wants.
To make it easy for you, we will professionally prepare your Notice for you. Just fill in the details on our on-line form and we will email it for you, with your supporting documents, to the parties to the dispute.
Once a Notice has been sent, the parties have 3-weeks to negotiate between themselves to attempt to resolve the problems that have been identified before any further action is taken.
Both the franchisor and the franchisee are under an obligation to act in good faith to resolve the dispute.
Where the dispute is long standing and well known between the parties, you can ask the other party to agree to dispense with the period of private negotiation and go immediately to Step 3 and have a mediator appointed to facilitate the resolution of the dispute.
Where a dispute cannot be resolved between the parties within 3 weeks, the Code provides that mediation must take place if either the franchisor or the franchisee refer the matter to a mediator.
A mediation is an assisted negotiation with an independent, accredited and experienced third party. When a mediator is engaged the negotiations can be frank, private and legally privileged. Legislated procedures provide a powerful and quick way to get the parties to meet together and attempt to resolve the dispute in good faith before taking legal action and incurring substantial expense.
Contact the Franchising Dispute Resolver to request the appointment of a mediator to assist with the resolution of your dispute.
Administering your Dispute
We provide end-to-end administration of your dispute to ensure a speedy resolution.
Starting with the Notice of Dispute. We properly format the Notice for you, convert it to a PDF document, help you electronically sign it, upload your documents to be sent with the Notice and then send it on your behalf to the other party. We also follow you up to see if you are in contact with the other party.
When you are ready to proceed to Mediation, we will register your request and assist you provide the information you need to send to the other party. You can upload those documents on-line and we will arrange to email all the material you want to send to them and any other interested parties, like the lawyers.
Video-conferencing facilities are provided at no additional cost, for the conduct of pre-mediation meetings or even the conduct of the mediation, if the parties agree.
Our administration staff will personally contact you and the other party to discuss the nature of your dispute, the mediator skills required and the timing of the mediation.
We will prepare the completed mediation agreement for signature as an electronic document and send it to you along with information sheets about the mediation process.
Get a Mediator to assist you
Once a party lodges a Notice outlining their concerns with the other party, it immediately triggers the legislated dispute process
If the complaint is not resolved at the end of the 3-week period allowed for negotiation, either party can request a mediator be apponted to facilitate the discussion and resolution.
The mediator is an independent and accredited professional facilitator (usually a practising lawyer with franchising experience). The mediator will usually set the matter down for mediation to be conducted in the State or Territory in which the franchised business is based.
Once the mediator sets the date and time for the mediation, the other party:
- must attend the mediation
- must negotiate in good faith
- must pay half of the mediation fees.
The mediation process is both privileged and confidential. This allows the parties to talk frankly and openly with each other and with their lawyers present (if required). With the mediator’s assistance, the parties aim to design an outcome to resolve the problem as discussed and defined by the parties.
Multiple Franchisees in dispute with a Franchisor
We have assisted many franchisees from the same franchise system resolve their conflict with their Franchisor. You can avoid the legal wars and explore the opportunities available.
Whilst the Code of Conducts does not currently mandate multi-party mediations, many franchisors welcome an orderly process of negotiation and mediation that can assist all parties to explore the options and arrive at a joint resolution.
Whe are able to work with your group to help engage and influence the franchise relationship.
The recent Commonwealth Senate Joint Committee Inquiry into the franchising industry has recommended that a mediator or arbitrator be empowered to undertake multi-franchisee resolutions when disputes relating to similar issues arise.
We have the skills and experience to assist franchisees and franchisors explore this new avenue for resolution.
Dispute not resolved, what next?
The Franchising Code does not provide a mechanism for the mediator to make a determination about the merits of each party’s case. If after 30 days from the mediation starting, there is no resolution, either party can ask the mediator to terminate the mediation.
When a dispute was not resolved by mediation, it used to mean there was no other option for a franchisee, but to “give-up”, take what was offered or initiate expensive and lengthy litigation in the court system.
The recent Franchising Inquiry conducted by the Australian Senate, recommended that the dispute resolution scheme under the Franchising Code of Conduct remain mandatory and be enhanced to include the option of binding arbitration.
Where an arbitration is conducted the arbitrator has the capacity to award remedies, compensation, interest and costs.
If the mediation is unsuccessful, we can assist you and your franchise partner with the legal adjudication of your dispute by appointing an expert evaluator or arbitrator to make a determination.
Need to contact the Franchising Mediation Adviser?
The Franchising Code of Conduct specifically requires the appointment of a Mediation Adviser.The Franchising Mediation Adviser is appointed by the Minister.
The Franchising Mediation Adviser plays an important role in the resolution of disputes under the Franchising Code of Conduct as the Adviser can make a binding selection of a mediator for a dispute.
Parties can seek to resolve a dispute under either:
• the Internal dispute handling procedure of Division 2 or;
• the Code complaint handling procedure of Division 3.
Where the franchisee and franchisor disagree about who to select as the mediator, the Franchising Code provides that either party may ask the Mediation Adviser to appoint a mediator.
Although the Franchising Code of Conduct specifically requires the appointment of a Mediation Adviser, the details of who is the current Adviser and how to contact the Adviser, is not publicly available.
You can click the link below to be sent the Mediation Adviser contact information if you need to request the Adviser’s assistance with the appointment of a mediator.