Franchise Dispute Resolution​

Franchise disputes are common and can be very stressful for both franchisors and franchisees. Studies suggest that almost a quarter of all franchisees have had a dispute with their franchisor and many of these disputes result in expensive and time-consuming litigation.

Franchising is subject to a number of complicated regulations which franchisors must abide by when franchising their business. The combined effect of these laws and regulations is that franchise documents can be a legal minefield and result in franchising disputes.

It is therefore important for franchisors and franchisees to have an experienced franchise dispute resolution lawyer to help them navigate a franchise dispute.

What types of franchise disputes can arise?

Franchisors and franchisees can fall into dispute in relation to many different aspects of the franchise relationship. Some of the most common areas of dispute are:

  • Interpretation of the franchise agreement, where each party argues that the franchise agreement imposes different obligations on a party;
  • Disputes over payment of money including franchise fees, marketing expenses or the payment of rent or licensing fees;
  • Disputes relating to the franchisee’s performance and whether the franchisee is meeting KPI’s and other obligations;
  • Allegations by the franchisee that the franchisor is not providing the support, training and assistance required for the franchisee to successfully operate the franchise;
  • Disputes relating to the performance of the franchise, particularly where the franchisee alleges that the franchisor misrepresented the financial performance or returns from the franchise prior to the franchisee purchasing the franchised business.

What is a dispute notice?

The Franchising Code of Conduct requires that a franchise agreement must contain a dispute resolution clause that complies with the Code.

Usually, this means that either the franchisor or franchisee must issue a dispute notice to the other party, formally notifying them of the dispute. The dispute notice should be in writing and should set out the nature of the dispute, the outcome that you expect and the action that will achieve that outcome.

If the dispute cannot be resolved, the parties must then attend a franchising dispute resolution process of mediation.

Often, alternative dispute resolution can result in the matter being resolved. However, in some instances, especially those involving claims by the franchisee of misrepresentation or claims by the franchisor for unpaid monies, resolution is not possible and court proceedings are required.

Franchise dispute resolution case studies

Lawpoint’s team of highly experienced litigation and franchise dispute lawyers can help both franchisors and franchisees best protect their interests in a franchise dispute. We have acted for both franchisors and franchisees in a number of franchising disputes.

Case study 1-franchisee

We acted for a franchisee who claimed that a major, national franchisor engaged in unconscionable conduct, misrepresentation and “churning” in relation to a franchise purchased by our client.

“Churning” has been described as the practice of franchisors setting up a franchisee to fail, so that the franchisor can take over the franchise and re sell it again at a profit. If the franchisor sells the business repeatedly, those profits are increased.

Despite the franchisor’s deep pockets and heavy-handed tactics, the court case was ultimately settled on terms favourable to our client.

Case study 2-franchisee

We acted for a franchisee against an international franchisor who sought to unilaterally reduce our client’s territory under the franchise agreement.

We successfully resisted the attempt to do so by the franchisor and ultimately negotiated a more beneficial territory for our client in exchange for our client agreeing not to take legal action against the franchisor.

Case study 3-franchisee

We acted for a franchisee against one of Australia’s largest franchisors in a claim for misrepresentation and unconscionable conduct after the franchisor had wrongly terminated the franchise agreement.

We resolved the matter successfully, with the franchisor agreeing to purchase the franchise from our client and compensate our client on terms which were very favourable to our client, without the need for our client to commence court proceedings.

Case study 4-franchisor

We acted for a fast food franchisor who claimed numerous defaults under the franchise agreement by a franchisee, including the non-payment of franchise fees.

The franchise agreement was successfully terminated and outstanding monies recovered from the franchisee.

Your franchising lawyers

Lawpoint acts for both franchisees and franchisors in the complex area of franchising law. We are experienced franchising lawyers who understand the law from both the franchisor and franchisee perspective.

We are experienced litigators and dispute resolution lawyers who have the experience, skill and tactical nous to ensure that your case is conducted in the strongest and best way possible.

Why choose Lawpoint?

Clear Communication

We save legal jargon for other lawyers. Clients can expect clear and simple communication that will alleviate the stress of a legal matter and assist in making good decisions. 

Efficiency 

Sharp legal minds means more efficient lawyers. Our team works strategically towards client-oriented outcomes. We aim to resolve all cases in an efficient and cost-effective manner. 

Determination

We fight determinedly for all of our clients. No matter is too big or too small. We have an extensive network of like-minded barristers who we can call on when required.

Integrity

We take a 360-degree transparent approach to our services. We are accountable to our clients and always provide costs agreements.

Care

Clients are the heart of our work. We work hard to create a supportive environment where clients feel valued and cared for.

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