Open handshake or clenched fist?

Hong-An King, Assistant Mediation Adviser, OFMA

This article appears in the Sep/Oct 2014 issue of Business Franchise Australia & New Zealand


When your franchise business earns its full potential, everyone is happy in some way or another. But when things go pear shaped in the system, what can you do to resolve the issues and maintain healthy franchise relationships?

Franchising businesses all vary in product, culture and system, but they do have a few things in common: interdependent relationships, profit-making goals, and most disliked: at times, conflict.

Having conflict isn’t necessarily a bad thing. It may mean that some communication approaches or behaviours are incompatible with each other, but the business goals of the franchise are still the same.

So when conflicts or disputes arise, what can you do?

Firstly, we encourage parties to a franchise agreement to approach and negotiate with the other party. If the dispute is still not resolved, the Office of the Franchising Mediation Adviser (OFMA) can assist by providing educative advice and information on the process of mediation, and appoint a mediator to the dispute. We also assist parties to better understand or clarify their issues and interests, and facilitate dialogue between parties where possible.

The OFMA is an independent office, appointed by the Federal Minister for Small Business to provide mediation and other supportive services for disputes arising under the Franchising Code of Conduct. Where parties to a franchise agreement are in dispute, either one may contact OFMA and request information and assistance.

The OFMA has a panel of experienced franchise mediators to assist you to have a productive conversation with your franchisor or franchisee(s) with a view to resolving issues in ways that meet the needs and interests of both parties.

Dispute Resolution Procedures under the Franchising Code of Conduct (Code)

The Code applies to all franchises in Australia and Part 4 of the Code provides a mechanism for the process for resolving franchise disputes. The process can be initiated by the franchisor or the franchisee. It is confidential and the goal is to reach a negotiated agreement that both parties can live with.

Mediation is collaborative and co-operative, rather than competitive. It allows the parties an opportunity to voice their concerns to each other with a mediator present. A mediator is an independent person with expertise in the franchising sector. All mediators appointed by the OFMA are Nationally Accredited Mediators. Their role is to help facilitate the discussion rather than making a final decision on who is ‘right’ or ‘wrong’.

Outline of the steps for Dispute Resolution under the Code

1. Send a letter or Notice of Dispute to the other party

This is a requirement under the code as the first step in resolving the dispute. Under the Code, the Notice of Dispute must outline these three essential elements:

a) The nature of the dispute

b) What outcome the complainant wants

c) What action the complainant thinks will settle the issue.

Once the letter or Notice is sent to the other person, both parties are required to try and settle the dispute. However, if the dispute is not resolved after 21 days, then either party may contact our office to appoint a mediator.

2. Write a request to the OFMA to appoint a mediator

Under the Code, OFMA can appoint a mediator to the dispute once we receive a written request from either party. The appointment of the mediator will depend on the nature of the dispute and the location of the parties.

3. Attend mediation

Once a mediator is appointed, both sides must attend the mediation. Failure to do so would be in breach of the Code.

Benefits of mediation to keep in mind

Mediation is a helpful process for both parties, whether they are the complainant or respondent. There are many benefits, and here are just a few:

• The process of mediation assists parties to understand their own issues better as well as the other side’s;
• It provides an opportunity to strengthen and maintain the franchise business relationship in the long term;
• It seeks to resolve various types of conflicts quickly and efficiently; and
• It is cost effective, especially in comparison to the cost and time of going to court.

What have others said?

Mediations that are often reported as productive and successful tend to have parties who arrive at the mediation prepared with knowledge of the matter in terms of the facts and possible solutions. When parties come to the table with a willingness to  take the interests of the other party into account and actively engage in open and frank discussions, there is a higher rate of satisfaction for all parties involved.

OFMA’s other services

Furthermore, the OFMA can assist either party in various ways, whether it be clarifying the issues, referring them to relevant advisory bodies, provide guidance in understanding the elements of a Notice of Dispute. The OFMA also offer a free Early Facilitation Service for matters where there is only one or two straightforward issues that may not require the time or cost of the usual mediation process. Through this Service we contact the other party and try to facilitate agreement over the phone.

If you would like to seek further information or would like to have a free and confidential conversation about a problem with your franchisor or franchisee, you can contact the OFMA on:

P: 1800 150 667