Franchisor Name and Shame: New ASBFEO Powers Under Scrutiny

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has gained new Franchisor Name and Shame powers under the updated Franchising Code. These powers allow ASBFEO to publicly call out franchisors who refuse or withdraw from alternative dispute resolution (ADR). Here’s what this means for franchisors and franchisees.

If a franchisor refuses to engage in or withdraws from an ADR process, ASBFEO can publish this behavior at its discretion. The Code requires:

• Both parties to attend ADR with a representative authorized to settle disputes.

• The ADR practitioner to terminate the process if a party requests it with written reasons, issuing a certificate detailing the termination reasons.
  ASBFEO may use this certificate to decide whether to name and shame a franchisor.

Franchisors must approach ADR cautiously to avoid negative publicity. Withdrawal reasons must be reasonable and reflect good faith, as required by the Code. However, ASBFEO faces no obligation to act reasonably, and franchisors have no right of reply if named and shamed. This may deter franchisors from withdrawing, even when justified. A saving grace is that ADR can end after 30 days if no resolution seems imminent.

With 30 years of experience, I’ve seen few franchisors avoid ADR. This provision aims to benefit franchisees, but it won’t force resolutions. Compliance with participation meets obligations, though this amendment is unlikely to increase dispute resolutions via ADR.

Facing a franchise dispute? The Franchise & Business Lawyers can guide you through the ADR process with expert support. Reach out today to protect your interests.