The franchisor compliance manual

Code complaint-handling procedure

The internal complaint-handling procedure represents the minimum standard for complaint handling. As an alternative to using your internal complaint-handling procedure, you or the franchise may try to resolve a dispute using the procedure set out in the Code, which is more comprehensive.

Step one: inform the other party of the dispute

The complainant (this could either be you or the franchisee) must inform the respondent (the person with whom the complainant has a dispute) in writing of the dispute.

The complainant must tell the respondent the nature of the dispute, the outcome they want and what action they think will settle the dispute.

Step two: try to resolve the dispute

The parties should then try to agree about how to resolve the dispute. This involves the parties concerned trying to negotiate a resolution.

Step three: mediate

If you cannot resolve the dispute within three weeks, either the complainant or respondent may refer the matter to a mediator. If a dispute is referred to mediation, both parties must be represented at the mediation by a person who has the authority to enter an agreement to settle the dispute.

The mediator may decide the time and place for mediation, although it must be conducted in Australia.

There is no requirement to have legal representation at mediation. However, if you do decide to have your lawyer present, you should inform the mediator of this prior to mediation, as the franchisee may also wish to be legally represented.

If mediation is initiated, both parties must attend and try to resolve the dispute.

If the parties cannot agree on a mediator, either party can contact the Franchising Mediation Adviser through the Australian Small Business and Family Enterprise Ombudsman website, by email info@asbfeo.gov.au or phone on 1300 650 460 to request that the Mediation Adviser appoint a mediator to assist with the resolution of their dispute.

The Franchising Mediation Adviser was established by the Federal Government to provide alternative dispute resolution advice and, if parties are unable to agree on an appropriate mediator, to select and appoint a mediator to attempt to resolve the dispute.

The role of the Mediation Adviser is to help the parties resolve disputes that arise under the Code.

Further information about franchising dispute resolution services and the role of the Franchising Mediation Adviser is available from the Australian Small Business and Family Enterprise Ombudsman on its website or by calling 1300 650 460.

Termination of mediation

If a dispute is unresolved after 30 days from when you started mediation under the Code complaint-handling procedure, you or the franchisee may ask the mediator to terminate the mediation. If such a request is made, the mediator is required to terminate the mediation.

The mediator may also terminate the mediation without a request from either you or the franchisee at any time unless it is satisfied that a resolution of the dispute is imminent. If the mediation has not been successful and has been terminated, the mediator must issue a certificate of termination stating the names of the parties, the nature of the dispute, that the mediation is finished and that the dispute has not been resolved. The mediator must give a copy of this certificate to the Mediation Adviser and both you and the franchisee.

Cost of mediation

Parties must pay for their own costs of attending mediation under the Code complaint-handling procedure. Unless you have agreed otherwise, you and the franchisee are equally liable for the other costs of mediation specified under the Code. These include:

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

Alternatives to mediation

Any action taken under the Code or your agreement to try to resolve a dispute does not affect your right, or that of the franchisee, to commence legal action. In addition, the dispute resolution scheme does not prevent you (or the franchisee) from approaching the ACCC directly.

When there has been a breach of the Code, the affected party may be entitled to claim damages, obtain court orders to stop the contravention, or obtain other orders such as those requiring changes to the franchise agreement. You should seek legal advice on these issues.

Court action can be costly and time consuming; it can damage relationships, and there is no guarantee that it will provide the desired outcome. It may therefore be more practical to first try to resolve the dispute using the mechanisms provided for in the Code.

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