Costs of the ADR process of conciliation or mediation charged to franchisees and franchisor by Australian Dispute Resolvers

Under the Franchising Code, parties must pay for their own costs of attending the ADR process and are equally liable for the “costs of the ADR process” (unless they agree otherwise).

Here we discuss what  costs of the ADR processes of Conciliation and Mediation that franchisees and the franchisor will have to pay.

What are the costs of the ADR process

According to the Franchising Code [cl 41C(1)] the costs of the ADR process include:

  • the cost of the ADR practitioner, providing conciliation or mediation

  • the cost of room hire, travel and accommodation costs or virtual attendance technology used;

  • the cost of any additional assistance (say of expert reports) agreed by both parties to be necessary to the conduct of the ADR process.

Who pays the cost for the ADR process?

According to the Franchising Code [cl 41C(1)] the parties are equally liable for the costs of an ADR process.

Also, each party is responsible for their own costs of attending the ADR process.

What if one party “wins” the dispute?

Where parties do not attempt to resolve the dispute in good faith and the dispute ends up in an Australian Court to be litigated under the usual “adversarial system”, it is usual for the Judge to award the “costs” of bringing the dispute to the “winning” party. This is not the case under the Code of Conduct.

The object of the Franchising Code is to provide a flexible ADR process of conciliation or mediation that allows the parties to

  • meet privately
  • discuss matters under legal privilege
  • reach a confidential settlement
  • do not publish the resulting agreement
As no “determination” of the dispute is made by an independent third party resolver, there is no sense for costs to be “awarded” to one party of f the other.

Multi Party disputes

It is important to note [cl 41C(Note)] that the Franchising Code provides that if a single ADR process is conducted for multiple disputes, then the costs clause applies separately to each of the individual disputes.

The overall cost of an ADR Multi Parry process that is attributable to that multi-party dispute is therefore of total of each of the costs of the individual ADR  processes

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