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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?
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