We are open for business as usual and here to support you. We're taking virtual consultations now - Our response to COVID-19

How and why franchise disputes can be difficult to settle

July 24, 2019
Resource Centre
How and why franchise disputes can be difficult to settle
Dispute in your franchise? Sort it out with AANDI.
Dispute resolution
minute read

Know your franchise rights and where you stand when problems arise

Owning a franchise can be a deeply rewarding experience, but it is not without its complications. From time to time, a dispute between franchisor and franchisee can arise. Without appropriate dispute resolution methods in place to manage disputes, tensions can erupt, which may require legal intervention to resolve.

When disputes happen, they can be difficult to overcome, but swift resolution is essential so that you can continue to operate your business. We want to help you avoid franchise dispute cases wherever possible, so if you are experiencing franchise problems it is necessary to seek legal advice from a dispute resolution lawyer.

AANDI Lawyers are experienced dispute resolution lawyers with the skill and ability to help you resolve your franchise dispute in a respectful and positive way.

Why disputes arise in franchises

business man arguing

Franchises are governed by franchise agreements (‘agreement’) which are contracts between a franchisor and the franchisee. The agreement outlines certain behaviours and methods of operation that the franchisee must abide by in order to uphold the integrity of the franchise. The agreement also stipulates certain terms for each party to follow to ensure no unnecessary hardship or duress is placed on either party.

Your agreement contains a number of terms, clauses, inclusions, and features. It is the complexity of agreements that can lead to disputes.

Without a franchise dispute resolution method in place, franchise agreements can be fraught. Some common franchise disputes on the part of the franchisee that we have seen in the past have arisen from:

  • Stock price variation between ‘approved products’ and other providers
  • Lack of support from franchisor to franchisee
  • Franchisee being required to undertake promotions for the franchisor out of their own costs
  • Point of sale systems which have faults and issues, but which are mandated by the agreement
  • One-sided variations in price issued by a franchisor
  • Breaches to sections 18 and 21 of the Australian Consumer Law prohibiting conduct that is misleading or deceptive, or unconscionable

Franchisor disputes arise as well, and these stem from a range of factors including:

  • A failure to meet performance standards
  • Conflicting business operations which are in breach of trade agreements
  • Failure to pay necessary fees
  • Repudiation or abandonment of the franchise during a franchise term

We have outlined only a couple of the common disputes, but there are a range of breaches and disputes - each capable of a wide range of outcomes. One common factor to franchise disputes is that they rarely proceed to court. This is due to the practice of going through mediation to manage franchise disputes.

Resolving your franchise dispute with legal dispute resolution

When a franchise dispute is taking place, it’s a difficult time for both parties due to the cost and time disputes can absorb. While in some cases a franchise dispute will be resolved by the parties, a more common situation is that legal representation will be sought. This does not mean the matter is proceeding to court; it merely means that you will have legal counsel when preparing for dispute resolution and mediation.

When we act for a party in a franchise dispute, we assist in a number of ways:

  • We act on your behalf and assist you in ensuring that you understand your legal rights and obligations at every step.
  • A notice of dispute is prepared. We set out your legal rights and claims, and ensure that your mediator knows your position and what your best alternative outcome is.
  • We will seek to informally resolve your dispute prior to mediation. If this cannot be done, we will prepare for and attend the mediation with you and act as your representation in legal matters.

The reason why franchise disputes can be difficult to settle is largely because of the deeply complicated and often personal nature of such disputes. A franchisee may feel affronted that a franchisor has acted in such a way, and vice versa. This can lead to emotional turmoil in addition to contract conflict.

How we help resolve franchise disputes

meeting with lawyers

Our role as your legal representative is to alleviate the effect of emotional conflict and ensure that no matter what, your positions and interests are appropriately advanced.

  • We act as a buffer between you and the other party wherever necessary and will act for you in mediation, and in any further settlement negotiations.
  • The value of resolving disputes prior to proceeding to litigation is not to be understated; the cost, time, and overall investment is far less when matters are resolved in mediation.
  • In some cases it is necessary to proceed to court. If this is required, we have experience in commercial litigation and can protect your legal rights, regardless of how far your matter goes.

If you are involved in a franchise dispute and require the services of a specialist franchise dispute lawyer, then call us at AANDI Lawyers on [phone]. We are committed to the swift and dignified resolution of your franchise dispute.

Related articles