Franchise Mediation: What You Need to Know
Mediation is a structured yet flexible dispute resolution process that involves an impartial mediator who assists parties in reaching a mutually agreeable resolution. It is the most common form of Alternative Dispute Resolution (ADR) in franchising disputes.
Starting the Mediation Process
To initiate mediation, a Dispute Notice must first be issued. Once three weeks have passed from the date of the notice, either party may refer the dispute to an ADR process. Mediation is the preferred option under the Franchising Code of Conduct.
If a party refuses to attend mediation, they may be in breach of the Code and face civil penalties of up to 600 penalty units ($187,800 as at October 2025).
Mediation can be arranged through the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) or, if preferred, through a private mediator.
What Happens at Mediation?
Mediation typically unfolds in two phases:
1. Preparation Before Mediation
- A pre-mediation meeting is usually held approximately two weeks before the mediation date.
- Parties exchange relevant documents outlining their positions and desired outcomes.
- A confidentiality agreement is signed to ensure all discussions remain private and cannot be used outside the mediation process.
2. Mediation Day
- Mediation can take place in person or virtually and usually runs for either a half-day or full-day session.
- The mediator introduces the process and highlights the benefits of resolving the dispute through mediation rather than litigation.
- Each party presents their position, followed by a facilitated discussion of the issues, documents, and concerns.
- Offers are exchanged and negotiated through the mediator, who assists both parties in moving toward a resolution.
Although mediation is inherently flexible and unstructured, having clear goals and a strong strategy is critical to achieving a favourable result.
Why Mediation Matters in Franchise Disputes
Mediation is not always successful on the first attempt, but it often helps narrow the issues and opens the door for future resolution. Even where settlement is not reached immediately, many disputes are resolved within weeks of the mediation process.
At Franchise Legal Partners, we have extensive experience managing franchise mediations. We understand the nuances of the process and work with clients to create tailored strategies that maximise their legal and commercial position.
How to Prepare for Franchise Mediation
To ensure your franchise mediation is effective, consider the following:
- Prepare a strong position paper outlining your claims and expectations
- Be thoroughly familiar with the details of your case
- Understand your best-case and worst-case scenarios
- Collect and organise all relevant supporting documents
- Have a reliable support system in place, including legal representation
Frequently Asked Questions
What is mediation in franchise disputes?
It’s a confidential, non-binding process where a neutral mediator helps both sides resolve the dispute.
How do I start the mediation process?
You must issue a Notice of Dispute. After 21 days, either party can initiate mediation.
Is mediation mandatory under the Code?
Yes. Failure to participate may lead to civil penalties.
What happens during mediation?
- Both parties present their position
- A mediator facilitates discussion
- Parties work toward a mutual agreement
How should I prepare for mediation?
- Understand your case fully
- Gather all supporting documents
- Know your best and worst-case scenarios
- Work with a franchise lawyer to prepare your strategy
Still Have Questions?
Reach out to Franchise Legal Partners for a free initial consultation. We’re here to help guide you through every step of your franchise journey.