Official mediation advisors on hand…did you know?

By Glen Pauline | 06 Aug 2019 View comments

Trained mediators can bring about a swift resolution in a franchise dispute. There’s even an office of Franchising Mediation Advisor to help things along.

The mediation landscape has changed over the last few years in the franchising sector. Three different organisations managed the appointment of mediators in the past three years. The effectiveness of dispute resolution under the Franchising Code of Conduct has been investigated as part of the Senate Inquiry. And there is the prospect of arbitration of disputes that cannot be resolved through mediation becoming part of the dispute resolution landscape in franchising.

Who is the current Franchising Mediation Adviser?

Australians are accustomed to the revolving door at the Office of the Prime Minister over the last decade. The Office of Franchising Mediation Adviser has also seen a number of different incumbents of late. 

Until late 2018 the statutory Franchising Mediation Adviser role under the Franchising Code of Conduct was outsourced by the government. The Office of Franchising Mediation Adviser (OFMA) was privately run under contract. In late 2018 the government chose to bring OFMA back in-house, and it is now being performed by the staff of the Australian Small Business and Family Enterprise Ombudsman (ASBFEO). As of mid-2019, ASBFEO is the Commonwealth government office responsible for arranging mediation or alternative dispute resolution in the franchise sector.  

The Senate Inquiry into the Operation and Effectiveness of the Franchising Code of Conduct revealed that there was a lack of awareness in the sector of the Franchising Mediation Adviser, and OFMA.

So it makes sense for ASBFEO to be the one stop shop for franchisors and franchisees looking to have a mediator appointed by the Franchising Mediation Adviser. 

The Senate Inquiry’s recommendation that OFMA merge with the ASBFEO is effectively being implemented already. 

Of course, franchisors and franchisees are free to privately appoint a chosen mediator to conduct mediation. If chosen and appointed by the parties by agreement, the mediator is empowered with certain powers and responsibilities under the Code.  

Mediation can occur quickly

An important mechanism under the Code is the power of the mediator to decide the time and place of the mediation. The parties “must attend” the mediation or be liable to a civil penalty of 300 penalty units.

As a mediator I have found that having this power allows me to effectively bring the parties together in a timely fashion. I usually offer the parties a few options for the mediation date and usually can arrive on a mutually agreed date and venue. Occasionally I have reminded the parties that I will decide, if mutual agreement is not reached, and that they must attend once I decide. This is usually enough to get the parties to agree to dates I propose. It allows me to get the dispute resolution process underway relatively quickly, usually within a few weeks. 

Getting the parties to a mediation is often the key hurdle to overcome in resolving a dispute. Once there, the mediator can have an impact, and influence both parties, in relation to the dispute. 

Mediators have training and skills in resolving disputes, follow ethical rules of conduct, and want to help the parties get an outcome. Mediators also have powers to direct the parties to fulfil their requests, such as producing documents or information which may be relevant to the mediation issue.

The mediator has some useful tools at his or her disposal to oblige the parties to cooperate, and of course, act in good faith, by reason of the Code. 

Find and appoint a nationally accredited mediator experienced in franchising if getting the dispute resolved quickly is important.

Swift mediation may soon become a specific Code requirement, as a result of the Senate Inquiry’s recommendation that mediation start within a specified period once a mediator is appointed. 

Mediation effectively resolves most disputes

My experience as a mediator for OFMA has been that mediation is effective for most franchisors and franchisees. The large proportion of disputes are resolved, without recourse to litigation. Franchisor and franchisee either end the relationship on terms negotiated through mediation or resolve the dispute and continue the relationship.

As an example, between 1 January 2015 and May 2018 as an OFMA panel mediator, of the mediations I conducted in line with the Franchising Code of Conduct:

  • 85 per cent of disputes were settled. This was the same settlement rate reported to the Senate Inquiry by OFMA. 
  • only three (21 per cent) required mediation to be conducted on more than one day.
  • franchisor and franchisee ended their relationship on mutually agreed terms (achieved at mediation) in 75 per cent of disputes settled.
  • the relationship of franchisor and franchisee continued in 25 per cent of disputes settled on the basis of new arrangements agreed at mediation

The Senate Inquiry report acknowledged that mediation is well suited to franchising and may achieve a satisfactory outcome in up to two thirds of cases. 

If getting a settlement is important, mediation is effective to resolve most franchising disputes involving single franchisees.