Posted by Elizabeth Gore-Jones
on 24 May 2024
Mediation or alternative dispute resolution is a process provided for in the Franchising Code of Conduct which endeavours to allow parties to resolve disputes in a more timely and cost-effective manner than resorting to the court system.
The process is commenced by the complainant issuing a notice of dispute to the other party.
The notice of dispute must comply with the Code and outline what the dispute is, how the claimant wants the dispute to be resolved and what it believes will resolve the dispute.
The parties then have 21 days within which to resolve the dispute.
If no resolution is reached, then either party may refer the matter to the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) for the appointment of an alternative dispute practitioner. This is usually a mediator.
Once the matter has been referred to mediation, the parties must attend the mediation.
The mediator does not have the right to determine the matter but will assist the parties in resolving the dispute between themselves.
The parties are required to equally share the costs of the mediator.
There is no automatic right to legal representation at the mediation. However, it is common that the mediator will allow the parties to be represented by their lawyers.
Mediations are quite successful in Australia, with approximately 80% of them resulting in a resolution between the parties.
Whilst the Code was recently amended to allow for arbitration as a form of alternative dispute resolution, it is not a commonly used mechanism and can be as complicated and expensive as a court action.
If the parties are unable to reach a resolution at mediation, then they have the option of commencing court proceedings.
Either party may also refer the matter to the ACCC if they believe it is a matter that breaches Australian consumer law, including the Franchising Code of Conduct.
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