A guide to Franchise disputes
In a franchise system, the franchisor makes most of the strategic decisions . Master franchisees may make local decisions but the unit franchisees themselves often have little input. The success of a franchise system partly depends on balancing competing franchisor and franchisee objectives. Franchisors seek to maximize their market coverage, while franchisees seek to grow profitable businesses. See https://www.futurelearn.com/info/courses/international-franchise-law/0/steps/13667
Franchising in Australia is, in essence, a contractual relationship supplemented by specific requirements contained in the Franchising Code of Conduct (the Code) including the obligation to act in good faith. In many cases, franchising is subject to the general prohibition on unfair contract terms in standard form small business contracts.
The most common franchising disputes are; Disputes about the franchised territory, Termination of the franchise agreement, Franchisor advertising, Lack of communication, Rent or lease obligations, Initial franchisor disclosure, Not providing Operations Manuals or other information, and Amount of the franchise royalties. https://businessfranchiseaustralia.com.au/expert_advice/common-franchise-disputes/
Dispute resolution under the Franchising Code of Conduct (the Code) is a mandatory industry code that regulates the conduct of parties that participate in franchises. The Code establishes the process for resolving disputes between franchisors and franchisees.
There is the internal code of conduct which requires that franchisors develop internal procedures for handling disputes with franchisees. This procedure must be set out in the franchise agreement and meet certain minimum standards set by the Code.
The second step is mediation. If the above procedure doesn’t come to terms within three weeks, the party may seek a mediator. This is a cost-effective dispute resolution option for franchisees and franchisors under the Code.
Source: https://www.franchisingcode.gov.au/node/626
