The franchisor compliance manual

Dealing with disputes

Part 4 of the Code promotes the cost-effective and timely resolution of franchising disputes.

If a dispute arises between the parties to a franchise agreement, either party may take action to resolve the dispute by commencing the internal complaint-handling procedure set out in the franchise agreement, or the procedure under the Code.

Regardless of whether you are using the procedure outlined in your franchise agreement or the Code, you and the franchisee must try to resolve the dispute.

You will be taken to be trying to resolve the dispute if you approach the resolution of the dispute in a reconciliatory manner, including by:

  • attending and participating in meetings at reasonable times
  • making your intentions clear, at the beginning of the process, as to what you are trying to achieve
  • complying with any confidentiality obligations that apply during or after the process.

The obligation to act in good faith will also apply to you and the franchisee during the dispute resolution process.

Tips for resolving disputes

  • Make sure you are properly prepared before attending any meetings.
  • Consider what is realistically achievable.
  • Make sure you are clear on the process that will apply for resolving the dispute.
  • Try to find areas of common ground with the other party.
  • Be prepared to listen to the other party’s view.

Internal complaint-handling procedure

The Code requires you to develop an internal complaint-handling procedure, which should be set out in the franchise agreement. This procedure should aim to:

  • provide a speedy, cost-efficient process for resolving most commercial disputes between franchisors and franchisees
  • preserve the relationship between the parties to the dispute
  • create a solution that is acceptable to the parties and commercially viable.

This procedure must comply with the steps outlined in the Code for dealing with a dispute (see steps 1–3 below).