Recent changes to the Franchising Code of Conduct allows for the option of binding Arbitration to be used to resolve the dispute.

Previously, when a dispute was not resolved by an ADR process, it usually meant there was no other option but to “give-up”, take what was offered or initiate expensive and lengthy litigation in the court system.

Now the Code (cl 40A) provides that, after service of a Notice, when the parties must try to agree how to resolve the dispute, Arbitration could be one method that the parties agree to use. Unlike, the ADR processes of Conciliation or Mediation, which are available on request by either party, both the complainant and the respondent must agree, in writing, to have a dispute resolved by Arbitration. The dispute between the complainant and the respondent may, by written agreement, be resolved in whole or part by arbitration. The arbitration agreement may be the franchise agreement or in a separate written agreement.

Arbitration is a private form of judging according to law that is widely used in administrative tribunals around Australia, both at the state and federal level. The Arbitrator has the capacity to make a determination that is binding on the parties, award remedies, compensation, interest and costs.

As the Code notes (cl 43A), the dispute between the parties may be resolved in whole or part by Arbitration. This is a sensible approach. Parties can use the flexible and facilitative procedure of Conciliation to engage in a joint problem solving effort to settle the dispute. Where this is successful for the most part, but issues remain that are regarded as matters of “precedent” or legal interpretation, the parties can move to arbitration to get a binding determination on those few remaining matters.

The Franchising Dispute Resolver can assist parties with the organisation of a combined Conciliation & Arbitration process, if they want to achieve a final determination of their dispute and wish to avoid litigation.