Mediation

What it means

Mediation is the most common form of alternative dispute resolution under the Franchising Code. A neutral third party, the mediator, manages the conversation and helps the parties find common ground, but has no power to impose a decision. Any outcome is one the parties agree to themselves.

It is voluntary in outcome but effectively compulsory in attendance: once a dispute is properly referred, the Code requires both parties to attend and to try to resolve it in good faith. Discussions are confidential and cannot generally be used later in court, which encourages frank negotiation.

Mediation is usually faster and far cheaper than litigation. The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) maintains a panel of mediators accredited under the National Mediator Accreditation Standards and can appoint one when parties cannot agree on who to use.

In practice

A typical mediation is a single session, in person or online, sometimes with the parties in separate rooms while the mediator moves between them. Preparation matters: bring the franchise agreement, the disclosure document, correspondence, and a clear statement of the outcome you want.

If mediation succeeds, the settlement is written up and signed, and it becomes binding as a contract. If it fails, the parties keep their legal rights and can proceed to court, but a genuine attempt at mediation is expected first and refusing to engage can be publicised by the ASBFEO and counted against a party.

A real example

A gym franchisee and franchisor disagree over territory boundaries after a second outlet opens nearby. Rather than sue, they attend ASBFEO-facilitated mediation. Over one afternoon the mediator helps them agree a revised territory map and a modest fee credit. The deal is documented and signed the same day, costing each party a fraction of what a court fight would have.

Mediation — FAQs