Dispute resolution
What it means
The Franchising Code sets out a mandatory pathway for resolving disputes so that disagreements do not go straight to expensive litigation. Every franchise agreement must contain a complaints-handling procedure, and the Code also provides a default process the parties can use if the agreement's own procedure does not resolve things.
The process starts when one party gives the other written notice of the dispute, setting out the nature of the dispute, the outcome they want, and what action would settle it. The parties must then try, in good faith, to resolve it themselves within a set period.
If the dispute is still unresolved after 21 days, either party can refer it to alternative dispute resolution (ADR), meaning mediation or conciliation. Once referred, both parties are obliged to attend and to genuinely try to resolve the matter. Only if ADR fails do the parties typically move to court.
In practice
Referrals are often made through the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), which helps parties access the process and can appoint a mediator from an accredited panel. The Code also allows multiple franchisees with the same or similar complaint to bring a combined dispute, which the franchisor must take part in.
The 2025 Code strengthened these obligations. A party that refuses to attend, or withdraws without a genuine attempt to resolve the dispute, can be named publicly by the ASBFEO, and the reputational cost of that discourages franchisors from stonewalling. Good record-keeping and a clear written notice make the process faster and cheaper.
A real example
A cafe franchisee believes the franchisor is charging a marketing levy but not spending it on marketing. She issues a written dispute notice describing the problem and the outcome she wants (an itemised account of the fund). After 21 days with no resolution, she refers the matter to the ASBFEO, which appoints a mediator. At mediation the franchisor agrees to provide annual marketing-fund statements, avoiding a court case.
Dispute resolution — FAQs
Do I have to try dispute resolution before going to court?
In practice, yes. The Code requires parties to attempt its dispute process and ADR in good faith, and courts expect that these steps have been genuinely attempted first.
Who pays for the dispute resolution process?
Parties generally share the mediator's costs and pay their own expenses. The Code prohibits the agreement forcing one party to bear all of the other side's dispute costs upfront.
How long does it take?
The internal attempt runs for at least 21 days before ADR can be triggered; mediation itself is often a single session, so straightforward disputes can resolve within weeks.
What if the franchisor just refuses to participate?
Under the 2025 Code the ASBFEO can publicly name a party that refuses to engage or withdraws in bad faith, and refusal can weigh against them in any later court proceedings.
See the full franchise glossary, the Fee Index or our buyer guides.