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What you need to know about leasing and disputes

Sarah Stowe

Running a franchise can lead to great success but it may also require some challenging problem-solving. Here we look at the issues surrounding leasing and disputes.

In the first article in this series I looked at two fundamental questions you need to answer before you enter into a lease agreement. I also pointed out some areas where things can go wrong based on the 1,077 applications my Office received for retail leasing disputes alone in the 2014-2015 financial year.

In light of these figures, I am providing a checklist to work through if you find yourself in a dispute, or in a situation where a dispute may arise.

Please note, contact details for State Small Business Commissioners are provided at the bottom of this page.

1. Can you identify what the problem is and who the parties are?

In the earliest stages of a leasing dispute, it is a good idea to prepare a short statement of the problems at hand so that you can present a clear summary to the other party. This also enables any third party to identify what’s going on if the dispute escalates.

In preparation, you should consider:

  • has there been a breach of your lease and/or franchise agreement?
  • can you provide evidence showing a breach and any damage you have suffered?
  • aside from your contract / agreement with the landlord are you aware of the relevant laws in the area? Your State Small Business Commissioner should be able to point you in the right direction.

The earlier article clarifies who your landlord is in a franchising dispute.

2. What do you really want?

Consider if an agreement cannot be reached between you and the other party, what are your best and worst alternatives? Are there any other ways that you could settle this dispute? Also consider what is your bottom line.

In resolving disputes, it is important to consider where the other side may be coming from – however difficult that might be to do! Recognising that the other party will have their own side of the story is a key step in resolving disputes.

3. Have you contacted the other party yourself to discuss this issue?

Try to contact the party to discuss your issues. This will give them an understanding of the problem. At this stage, it is useful for the communication to:

  • be in writing
  • be calm and professional
  • deal with facts, not people or emotions
  • include options for the two parties to resolve their issues.

4. Will you be using a support person or professional representation?

You may want to consider using a support person. This may be a professional such as a lawyer or accountant, but it may also be a friend or colleague who you trust. If using a professional, make sure you are aware of:

  • what their costs are, and what they expect the total costs to be in representing you if a dispute takes longer to resolve than expected;
  • whether they have experience in this area. Do they specialise in commercial leasing issues, and do they understand the process of alternative dispute resolution?
  • if they have a good understanding of how you would be prepared to resolve this dispute and what you would settle for.

5 step summary

  1. Prepare a short statement summarising the facts of the dispute
  2. Clarify what you really want and how you would be prepared to resolve the dispute
  3. Write to the other party to discuss, clearly and calmly, your issue and possible options for resolution
  4. Consider arranging for a support person
  5. Consider whether you need dispute resolution/mediation

If you have worked through these steps and your dispute remains unresolved, contact your State Small Business Commissioner:

  • Victorian Small Business Commissioner:  www.vsbc.vic.gov.au or phone 13 8722
  • NSW Small Business Commissioner: www.smallbusiness.nsw.gov.au or phone 1300 795 534
  • WA Small Business Commissioner: www.smallbusiness.wa.gov.au or phone 13 12 49
  • SA Small Business Commissioner: www.sasbc.sa.gov.au or phone 1800 072 7222