Compliance & disputes

Arbitration

A dispute-resolution process where an independent arbitrator hears both sides and makes a binding decision. Under the Code it applies where both parties agree to it.

What it means

Arbitration is the most formal of the Code's dispute options. An arbitrator acts like a private judge: they consider evidence and arguments and issue a decision that binds the parties. It can be faster and more private than court.

Unlike mediation or conciliation, arbitration produces a result even if the parties do not agree, but under the Code it is available where both parties agree to arbitrate, either in advance or once a dispute arises.

In practice

Because an arbitrator's decision is binding, weigh it carefully before agreeing. Understand the costs, the rules that will apply, and how the arbitrator will be appointed, the ASBFEO can assist with arbitration services.

A real example

Unable to settle a termination dispute through mediation, a franchisor and franchisee agree to binding arbitration; the arbitrator rules the termination invalid and orders reinstatement, ending the matter without court.

Arbitration, FAQs

Is arbitration binding in a franchising dispute?

Yes. An arbitrator's decision binds both parties. Under the Code, arbitration applies where both parties agree to it, in the agreement or once a dispute arises.

When should franchising parties choose arbitration?

When they want a definitive, private decision rather than an open-ended negotiation, and both agree to be bound. Mediation or conciliation is usually tried first.

See the full franchise glossary, the Fee Index or our buyer guides.