What is Mediation?

Mediation is a process of assisted negotiation. The Mediator (often a lawyer or business professional who is accredited and has experience in the franchising industry) acts as an independent facilitator.

The mediator assists the parties to discuss the issues in dispute and engage in constructive discussion towards creative resolution and is not empowered to make a determination of the dispute (see arbitration).

How does the Mediation proceed?

The mediator first arranges for the parties to sign the Mediation Agreement that will legally govern (and protect) their relationship and the mediation process. The mediation agreement being a binding legal document must correctly identify the (legal) names of the parties.

Once the mediator sets the date and time for the mediation, then both party:

  • must attend the mediation,
  • must negotiate in good faith,
  • must pay half of the mediation fees.

A party is taken to attend mediation if the party is represented at the mediation by a person who has the authority to enter an agreement to settle the dispute on behalf of that party.

Where is the Mediation held?

The mediator will set the matter down for mediation to be conducted, usually in the State or Territory in which the franchised business is based.

If the franchise agreement was entered into before 1 January 2015 you may need to consult your Franchise Agreement to determine if any location for the conduct of the mediation has been specified.

Increasingly video conferencing is used to bring the parties together for preliminary discussions and it can be used where parties are interstate of international and the parties agree to use it for the mediation.

What are the Costs of Mediation?

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

Costs of the mediation include:

  • the cost of the mediator
  • the cost of room hire
  • the cost of any additional assistance (say of expert reports) agreed by both parties to be necessary to conduct the mediation.

The Mediator’s fees are charged at $300 per hour (plus GST) and each party pays half that fee.

Certificate of Mediation

If after 30 days from the mediation starting, there is no resolution to the dispute, either party can ask the mediator to terminate the mediation, and the mediator must do so.

Where the mediator terminates the mediation of a dispute, the mediator must issue a certificate stating:

(a) the names of the parties; and
(b) the nature of the dispute; and
(c) that the mediation has finished; and
(d) that the dispute has not been resolved.