Planning Franchise Dispute Resolution in Australia

A successful business can still encounter disagreements when it becomes a franchise community. Questions about support, charges or operating requirements can become costly disputes if nobody knows how to raise or resolve them. Before granting your first Australian franchise, build a process that gives concerns a fair hearing while keeping everyday operations moving.

Understand the legal framework

Australia specifically regulates franchising through the mandatory Franchising Code of Conduct, prescribed under the Competition and Consumer Act 2010. The current Code commenced on 1 April 2025, with transitional arrangements and some requirements starting later. Have a franchise lawyer confirm the provisions that apply to your agreements.

The Code sets minimum standards for dispute resolution procedures in franchise agreements and provides routes for resolving disputes without going to court. These include mediation and, where the parties agree, arbitration. Parties must also act in good faith in their dealings with each other.

Your agreement should explain the applicable dispute process clearly. An internal complaints policy can help staff respond consistently, but it cannot replace or restrict rights under the Code. Other laws, including the Australian Consumer Law and general contract law, may also affect a dispute.

Ask your lawyer to check that the agreement and internal procedure work together. Staff need to understand which steps are mandatory, what deadlines apply and when a matter needs legal attention rather than an ordinary customer-service response.

Create a clear route for raising concerns

Start with a named contact and a monitored email address. A franchisee should not have to guess whether to approach their field support contact, the accounts team or the founder. Nominate a deputy so that holidays or absences do not stop the process.

Distinguish between a routine service request and a dispute. A request for a replacement training document might be handled by support staff; an allegation that promised training was never delivered deserves a more structured response. Do not insist on a particular label before taking a serious concern seriously.

Under the Code’s dispute process, the complainant gives the other party written notice identifying the nature of the dispute, the outcome sought and the action they believe would resolve it. Create a simple template that helps capture these points without making it a barrier to raising concerns.

Your internal handling checklist should include:

• acknowledging receipt and identifying the person responsible;
• checking the agreement and any applicable legal deadlines;
• collecting relevant correspondence, invoices and support records;
• asking what practical outcome the franchisee wants;
• explaining the next step and expected response date.

Set realistic internal response targets, but distinguish them from statutory deadlines. Never imply that a franchisee loses their rights because they have not followed your preferred administrative format.

Give the right people authority to resolve issues

A complaints process fails when the person receiving concerns cannot make decisions. Define who may correct an invoice, arrange additional support, approve a settlement proposal or obtain external advice.

Where possible, appoint someone who was not directly responsible for the decision being challenged. In a small franchisor business, this might mean involving another senior manager or an external adviser. A founder should not automatically dismiss a complaint simply because it challenges a system they designed.

For example, if a franchisee disputes a support charge, compare the agreement, relevant disclosures, invoice and evidence of the service delivered. Separate the contractual question from the operational problem: even where a charge is properly payable, there may still be a support failure to address.

Keep communications factual and respectful. Record proposals, decisions and reasons. Treat threats to suspend supply, remove system access or terminate an agreement as matters requiring legal review, not routine negotiating tactics.

Prepare for external help before it is needed

Not every disagreement can be settled internally. The Australian Small Business and Family Enterprise Ombudsman can assist with franchise dispute resolution, and state small business commissioners may also offer help. The ACCC enforces the Code but is not a substitute for resolving an individual contractual dispute.

Mediation helps parties negotiate with an independent facilitator; the mediator does not impose a decision. Arbitration is different: an arbitrator determines the dispute under an agreed process. Obtain advice before agreeing to arbitration or signing settlement terms.

Budget for external advice and ensure your representative has appropriate settlement authority. Afterwards, review whether the dispute revealed an unclear charge, inconsistent support or an avoidable communication gap.

Practical takeaway: Before recruiting franchisees, have a lawyer check your dispute clause, appoint a responsible contact and rehearse the process using a realistic complaint. A clear route to resolution helps protect relationships throughout your franchise community.