Franchising: preparing for dispute mediation in Italy

Turning an existing business into a franchise network also means preparing for disagreements that cannot be resolved with a phone call. Before signing your first franchise agreements, it is worth planning how you will handle mediation: not simply a complaints channel, but a legally regulated process in which the parties seek an agreement with the help of an impartial third party. Preparing properly avoids improvised decisions when the relationship is already under strain.

1. Understand the Italian legal framework before drafting the clause

In Italy, franchising is governed by Law No. 129 of 6 May 2004, which requires the agreement to be in writing to be valid and regulates, among other things, contractual content and disclosure obligations. Dispute management also requires consideration of Legislative Decree No. 28 of 4 March 2010, which covers civil and commercial mediation.

Since 30 June 2023, following the reform introduced by Legislative Decree No. 149/2022, franchise disputes have been among those for which an attempt at mediation is generally a prerequisite for pursuing a court claim. Exceptions and special rules apply to certain proceedings: before taking legal action, your lawyer must check the circumstances of the particular case.

A mandatory attempt at mediation does not mean that the parties must reach an agreement. The mediator does not decide who is right, as a judge would; they help the parties seek a solution. In mandatory mediation, each party is assisted by their own lawyer.

Article 7 of Law No. 129/2004 also provides for a clause requiring a prior attempt at conciliation through the chamber of commerce with territorial jurisdiction. This provision needs to be read alongside the current rules: inserting a generic sentence about conciliation is not enough to satisfy every requirement.

2. Have a workable clause drafted, not a decorative one

If you are preparing your first agreement, ask your lawyer to distinguish between three stages: direct discussions, mediation and possible court proceedings. Internal negotiations can be useful, but they do not automatically replace the process required by law.

The clause should explain how to initiate the process without creating artificial obstacles. In particular, you should check:

• how any preliminary negotiations fit with mandatory mediation;
• the criteria for selecting a mediation provider, including confirmation that it is listed on the Ministry of Justice register;
• compatibility with the rules on territorial jurisdiction;
• how the clause relates to the choice-of-court clause and any arbitration provisions;
• protection of the right to seek urgent remedies permitted by law.

Do not copy a clause from an old commercial agreement. It may refer to outdated procedures or require steps that are incompatible with one another. Choosing a provider far from all your franchisees simply for the convenience of head office also calls for legal and practical assessment, rather than an automatic decision.

3. Prepare records and authority to act

Preparation begins when you build the network, not when the first complaint arrives. Each franchisee needs an organised file that allows you to reconstruct the facts, obligations and communications without relying on the founder’s memory.

The file should contain the signed agreement and schedules, evidence that pre-contractual disclosures were provided, the applicable versions of procedures, training records, support provided, invoices and relevant correspondence. There is no need to collect personal data indiscriminately: access, retention and sharing must comply with data protection law.

For example, if a franchisee disputes whether promised support was delivered, a timeline of requests, responses and actions taken is more useful than a folder of unsorted messages. Keep documents that weaken your position, too: withholding them from your adviser prevents a realistic assessment.

Also establish who can negotiate and what authority they have. Personal attendance is the rule; representation and delegated authority must meet the applicable requirements. For a company, the person attending must know the facts and have the authority needed to settle the dispute. A general authorisation should not be assumed sufficient without checking.

4. Assess the settlement and make it workable

Before the meeting, work with your lawyer to assess the claims, available evidence, costs and operational consequences. Establish which concessions require further approval and who can give it promptly.

A useful settlement must be specific: amounts, deadlines, actions to be taken, those responsible and ways to check compliance. If the franchise relationship is to continue, consider how the commitments will be met without introducing contradictory or unsustainable obligations. Your lawyer will also address any requirements needed to make the settlement directly enforceable.

The confidentiality of the process must be respected: minutes and statements must not become material to share freely across the network. Organisational lessons can, however, inform wider improvements without disclosing protected information.

Before signing your first franchisee: have the clause reviewed, set up the document file and identify who will have authority to negotiate. Mediation works better when the organisation is ready before a conflict arises.