Franchise mediation and arbitration: what both sides must do

• Every franchise agreement must contain a complaint procedure with the same effect as the Code's (s69).
• Mediation must be held in Australia and can be run by video (s74(2)).
• Costs are split equally unless you agree otherwise. ASBFEO says a mediation costs around $4,000 on average, or $2,000 each for two parties.
• Arbitration is different: it happens only if both sides agree in writing, and then attendance is compulsory too (s79 and s80).
• Nothing in the process stops either side going to court (s68).

1. Raise the issue in writing, stating the nature of the dispute, the outcome you want and the action you think would resolve it (s72(1)).
2. Both sides then try to agree how to resolve it, which can include agreeing to arbitration (s72(2)).
3. If you can't agree within 21 days, either side can refer the matter to a mediator or conciliator (s72(3)).
4. If you can't agree on who, either side can ask ASBFEO to appoint one, and it must do so within 14 days of the request (s72(4) and (5)).
5. The mediator sets the time and place. It must be held in Australia and can be run by video, and the mediator tells ASBFEO within 28 days that it has started (s74).
6. Both parties attend, directly or through someone with authority to settle, and try to resolve the dispute (s74(3), s74(4) and s75).
7. After 30 days without resolution, the mediator can end the process unless a resolution is imminent, and must end it if a party asks in writing with reasons (s76).
8. If it ends unresolved, the mediator issues a certificate to ASBFEO and both parties stating that the dispute wasn't resolved and why the process ended (s76(4) and (5)).

• Include in every franchise agreement a complaint handling procedure with the same effect as s72(1) to (4) and s74 (s69).
• Attend any mediation or conciliation referred under the Code, directly or through someone with authority to settle. Failing to attend can attract up to 600 penalty units, which is $218,400 for conduct from 1 July 2026 (s74(3) and s75).
• Try to resolve the dispute in a reconciliatory way: attend meetings at reasonable times, make its aims clear at the start of the process, and keep to confidentiality obligations (s71).
• Avoid action, or refusals to act, during the dispute that would damage the system's reputation. The Code's examples are supplying inferior goods, services or support, or refusing to supply them (s71(b)).
• Pay its half of the mediation costs unless the parties agree otherwise, plus its own costs of attending (s77).
• Not require the franchisee to pay the franchisor's costs of settling the dispute (s66).
• Not include terms that force court action or mediation outside the state or territory where the franchised business is based, or outside Australia (s40).
• Say in the disclosure document whether the agreement provides for arbitration consistent with the Code (item 17A).

• Give a written notice of dispute before referring the matter: the nature of the dispute, the outcome you want and the action that would resolve it.
• Try in good faith to agree a way forward for 21 days.
• Attend the mediation, directly or through someone with authority to settle, and try to resolve the dispute. The attendance duty and its penalty apply to you too.
• Pay half of the mediation costs unless agreed otherwise, and your own costs of attending, such as your lawyer's fees.
• Keep to any confidentiality requirements about information disclosed or obtained in mediation or arbitration (s83).
• Keep trading and meeting your obligations while the dispute runs, unless your lawyer advises otherwise.

1. Don't wait. Once 21 days pass after your written notice without agreement on how to resolve it, refer the dispute to a mediator yourself (s72(3)).
2. If the franchisor won't agree on who, ask ASBFEO to appoint a mediator through its online form. It must appoint within 14 days.
3. Tell ASBFEO if the franchisor refuses to take part or withdraws. ASBFEO can publicise that in any way it thinks appropriate (s78), for conduct from 1 April 2025 under agreements entered into, transferred, renewed or extended since 1 January 2015.
4. Report the refusal to the ACCC, which enforces the Code. Failing to attend a Code mediation is a civil penalty breach.
5. Ask your state small business commissioner for help. The 2023 Code review noted that commissioners in Victoria, New South Wales, Queensland, South Australia and Western Australia can help franchise participants access mediation or refer them to ASBFEO.
6. Ask ASBFEO about subsidised legal advice. It has piloted low-cost legal advice for eligible small businesses in disputes, with a $100 co-payment, and its March 2026 quarterly report said the pilot would run until August 2026, so check whether it is still available.
7. Get legal advice about court action. The dispute process doesn't affect either side's right to bring legal proceedings (s68).

ASBFEO's March quarter 2026 report describes a business that at first refused to engage in the Code's dispute process. After ASBFEO clarified that its business model met the Code's definition of a franchise, and noted that a refusal could be publicly disclosed, it agreed to mediate.

• A dispute can be resolved in whole or part by arbitration only by written agreement, either in the franchise agreement or in a separate agreement (s79).
• Both parties must ask ASBFEO to appoint an arbitrator, and can name one they've agreed on (s80(2) and (3)).
• ASBFEO must appoint within 14 days, unless the complaint is frivolous or vexatious or has already been arbitrated (s80(4)).
• The arbitrator decides how, when and where it runs, including by phone or video, but it must be held in Australia (s80(5) and (6)).
• Each party must attend, directly or through someone authorised to settle, with up to 600 penalty units for not attending (s80(8) and (9)).
• Each party pays half of the reasonable costs of the arbitration, plus its own attendance costs, unless the parties agree otherwise (s82). It ends early only if all parties jointly ask the arbitrator to end it (s81).
• ASBFEO describes Code arbitration as binding when the parties have agreed to it in writing.
• Arbitration clauses are common: in FranchiseScope's analysis of Franchise Disclosure Register profiles captured on 19 August 2026, 588 of 921 profiles answering (63.8%) said the agreement provides for arbitration consistent with the Code. The answers are self-reported by franchisors.

ASBFEO's quarterly reports show demand rising since the current Code started. The wording of the measure changed between reports, so treat the trend as indicative.

• New franchise disputes given a case manager: 27 in the December quarter 2023, 32 in the December quarter 2024, 48 in the September quarter 2025, 55 in the March quarter 2026 and 68 in the June quarter 2026.
• ASBFEO said the September quarter 2025 figure was the highest since the December quarter 2022, when there were 57.
• Franchisees raise most disputes: 36 of the 48 in the September quarter 2025 were initiated by franchisees.
• In the June quarter 2026, franchising made up 9.2% of all new disputes ASBFEO actively managed, and it answered 95 franchising enquiries.
• Recurring issues in 2026 included exit, expiry and non-renewal disputes, and termination offers with short deadlines.
• ASBFEO's figures are likely an incomplete picture, the 2023 Code review said: it actively managed about 150 franchise disputes in the 12 months to June 2023, a rate of about 0.2%, yet over a third of the self-selected franchisees answering the review's survey reported a serious dispute in the previous year.
• About half of the franchisees surveyed for that review said they knew about ASBFEO's dispute service.

• Is the notice of dispute in writing, with the dispute, the outcome wanted and the proposed action?
• Have 21 days passed without agreement on how to resolve it?
• Who will mediate, and has ASBFEO been asked to appoint someone if needed?
• Who will attend for each side, and do they have authority to settle?
• What will the mediation cost, and how will the cost be split?
• Does the agreement provide for arbitration, and do both sides want it?
• Have the confidentiality requirements and every deadline been noted?