If the franchise partnership ruptures into dispute, we skilfully ensure its quick and efficient resolution. Franchise models are powerful vehicles for success in the challenging, unpredictable world of business. If a proven business model works, then it can be replicated across different markets and cultures to achieve success. Basically the franchise model is a sort of “plug in and play” model, for a licence and royalty fee. However, like in all business relationships, a dispute can arise between a franchisor and franchisee. Disputes between franchisors and franchisees are common. we advise, assist and guide franchisors in all matters involving the Franchising Code of Conduct and solving disputes in the franchise industry.
Success in Franchising
Franchising models are designed to impart knowledge, expertise and intellectual property from the franchisor to the franchisee. The franchisee is meant to benefit from the platform of franchise model and thereby gain profits that would otherwise be impossible or difficult to replicate. The franchisor on the other hand should profit from their intellectual property. When everyone is making money, then all is good. When franchise success is mediocre or worse, then the franchise relationship can rupture into dispute. The dispute can originate before or after the commencement of franchise operations.
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Just like in a divorce, an unsolved franchise dispute can lead to the termination of a contract, destruction of the relationship, and a string of outstanding issues holding the respective parties back from their future goals. Therefore franchise disputes need to be resolved quickly. From the franchisor’s point of the view, the franchise brand must be protected to continue goodwill. From the franchisee point of view, they need to maximise the return on their investment. Therefore, it important that you resolve disputes as soon as possible to strengthen your business relationship and keep the franchisee’s business running.
A franchise dispute can arise due to:
Breach of the franchise agreement
Franchise schemes, swindles, or scams
Legitimate commercial interests
Misleading and deceptive conduct
The Franchising Code of Conduct
Besides the contractual obligations under their franchise agreement, franchise partners are regulated by The Franchising Code of Conduct. The Franchising Code of Conduct, is just that – a code designed to regulate conduct. The Franchising Code of Conduct aims to bring harmony between franchisors and franchisees. The Franchising Code of Conduct covers conduct arise from all conceivable aspects of the franchise relationship including:
A good faith obligation
A dispute resolution mechanism
A cooling-off period
procedures for ending a franchise agreement
It can be difficult for the two parties to act in good faith all the time. The good faith obligation requires a franchisor to act with due regard to the rights and interests of a franchisee. The mandatory code of conduct also describes the process by which the two parties can manage disputes as they arise. The goal of the Franchising Code of Conduct is to help the two parties resolve their dispute without commencing legal proceedings.
The Franchising Code of Conduct encourages two options of resolving franchise disputes: Internal dispute resolution and mediation. The company can initiate an internal dispute resolution process which comprise of which is outlined in the agreement. The complaint handling procedure should meet the minimum standards set by the Franchising Code of Conduct.
Notice of Dispute
A franchise dispute resolution is initiated by a notice of dispute. This document describes the nature of the dispute, the outcome that you want and the action that you recommend to settle the dispute. By issuing a notice of dispute, the franchisee is under legal obligation to negotiate in good faith and try solve the matter within a period of 21 days. For successful negotiations, you need to get enough legal guidance and advice as you prepare for the mediation process. With my help, we can come up with a solution within the timeframe required by the Franchising Code of Conduct.
Once a mediation is requested, it becomes mandatory for both parties to attend and to genuinely try to resolve the dispute. Mediation is a cost-effective way to resolve franchising disputes without resorting to complex and costly legal action. Participants in mediation should be aware that mediators don’t give legal advice or make decisions like a judge; they assist parties to come together and negotiate an outcome that is acceptable to both parties.
Sometimes an arising dispute can escalate very fast to the point that the franchisee decides to commence legal action against the franchisor. In this case you will need a franchise litigation lawyer to help win the legal proceedings. Feel at peace to call me for representation in court. There is always a winning solution for all of my clients, and I am confident that together we will find one for you.
Our Franchising Expertise
Feel free to contact us for expert advice and assistance in notifying the franchisee of the matter and the details regarding the dispute. If you are looking for a commercial litigation lawyer and an expert in franchise dispute mediation then contact us. We have the knowledge and skill to personally assist you in resolving any franchise dispute.