Buying a Franchise in Australia: Check Dispute Procedures

A disagreement with your future franchisor may feel unlikely while you are discussing a new business opportunity. Nevertheless, checking the dispute procedure before signing is an important part of buying into Australia’s franchising community. A workable process will not prevent every problem, but it can help you address one without immediately turning to expensive legal proceedings.

Understand the legal framework

Australia specifically regulates franchising through the mandatory federal Franchising Code of Conduct. The current Code commenced on 1 April 2025 and includes rules for resolving disputes between franchisors and franchisees. The Australian Competition and Consumer Commission (ACCC) regulates compliance with the Code. The Australian Consumer Law and general contract law also apply.

Your franchise agreement should explain the process for handling disputes. Read that clause alongside the Code rather than treating the contract as the only source of your rights. Ask an independent franchise solicitor to explain how the contractual procedure interacts with the statutory process, including any transitional rules relevant to the agreement you are considering.

The Code’s dispute resolution framework encourages parties to resolve disagreements without costly litigation, including through mediation. This is not a guarantee that the franchisor will accept your position or compensate you.

Also distinguish regulatory enforcement from resolving your own commercial problem. Reporting possible misconduct to the ACCC is not a substitute for pursuing an individual remedy through the appropriate dispute process.

Trace the route from complaint to outside help

Before committing, ask the franchisor to walk you through a hypothetical disagreement. For example, imagine that you believe an agreed service has not been delivered and the usual support contact has not resolved the problem.

Find clear answers to these questions:

• Who receives a formal complaint, and where must it be sent?
• Does the agreement specify how notices must be delivered?
• Who has authority to negotiate a resolution?
• What happens if direct discussions fail?
• How can an independent dispute resolution practitioner become involved?
• Which deadlines apply at each stage?

Under the Code’s process, a party raising a dispute should notify the other party in writing, explaining the nature of the dispute, the outcome sought and the action that would settle it. Your solicitor can explain the applicable escalation requirements and time limits.

A general promise that “we always sort things out” is not enough. You need an identifiable route that remains usable if your normal contact leaves or the relationship deteriorates.

Keep a copy of the procedure with your proposed agreement. Check whether complaint contact details are consistent across the documents supplied to you.

Check what each resolution method actually does

Do not assume that every reference to outside assistance means someone will decide who is right.

In mediation, an independent mediator helps the parties discuss the dispute and seek an agreed outcome. The mediator does not ordinarily impose a decision. Conciliation similarly helps parties work towards resolution, although the practitioner may take a more active role in exploring options.

Arbitration is different: an arbitrator can determine a dispute within the scope of the parties’ agreement to arbitrate. Ask your solicitor whether the contract proposes arbitration, when consent is needed and what effect an award would have.

Check the practical arrangements as well. Would participation require travel? Could meetings take place remotely? Who chooses the practitioner, and what happens if the parties disagree about that choice?

The Australian Small Business and Family Enterprise Ombudsman can assist with access to franchise dispute resolution services. Identify that avenue before you need it, rather than relying solely on the franchisor to explain your options during a disagreement.

Assess costs and business continuity

A dispute procedure should be assessed for affordability as well as legal compliance. Ask your solicitor to check clauses dealing with practitioner fees, venue expenses, advisers’ costs and any proposed allocation of costs between the parties.

The Code prohibits a franchise agreement from requiring a franchisee to pay the franchisor’s costs of settling a dispute. That does not make dispute resolution free: you may still face your own advisory expenses and a contribution towards the resolution process. Obtain an explanation of which costs you could legitimately bear.

Next, consider how the outlet would keep operating while discussions continue. Do not assume that lodging a complaint suspends your payment or operational obligations. Withholding fees or stopping performance without advice could create a separate contractual problem.

Ask your solicitor what urgent options might be available if the disagreement threatens immediate harm to the business. Preserve relevant correspondence, invoices and dated records, while continuing to handle customer and employee information appropriately.

Practical takeaway: Before signing, be able to explain the dispute route in plain English: whom you notify, what you must write, how you obtain independent help and which costs you may face. If the documents do not make that clear, resolve the uncertainty with your solicitor before committing.