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Franchise Mediations - helpful or a waste of time?

Posted by Elizabeth Gore-Jones on 20 February 2020

I am a staunch supporter of mediations in franchise disputes.

In a world where litigation can be outside the financial reach of many parties (franchisors and franchisees) mediation gives the parties an opportunity to reach a resolution which helps to avoid:

1. the expense of litigation;

2. the time and effort of litigation;

3. the stress of litigation;

4. bad publicity; and

5. tying up resources that could be best expended on looking forward rather than backward.

Many franchisees believe that franchisors are just "playing the game" when participating in mediation, and they really aren't motivated to resolve an issue because they assume the franchisee cannot afford to progress the matter to litigation if the dispute does not resolve at mediation.

I obviously cannot speak for all franchisors and, in some instances, that may be the franchisor's strategy.  However, franchisors may be motivated to resolve the dispute at mediation for a number of reasons which may include:

A. they recognise it is not in anyone's best interests to keep an unhappy franchisee in the franchise system, the mediation may give the parties a forum to negotiate an exit strategy;

B. they realise they have breached the franchise agreement, the Franchising Code of Conduct or other applicable law and it is in their best interests to reach a resolution at mediation;

C. they are concerned about bad publicity;

D. they are concerned about the franchisee influencing other franchisees to go down the same path; and

E. they are concerned about the franchisee making a complaint to the ACCC.

There are no guarantees that a mediation will be successful.  However, if the parties cannot resolve a dispute then a mediation is a valuable tool to use in the process.

*You should seek legal advice about your particular legal circumstances. 

Author:Elizabeth Gore-Jones
About: Elizabeth specialises in franchising law. She lectures at Bond University PLA in franchising, she sits on the Queensland Law Society Franchising Committee, she is a past member of the Women in Franchising committee and a past member of the Franchise Council of Australia.
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