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New Panel Offers Resolutions for Franchisees

New Panel Offers Dispute Resolution for Franchisees

The Franchise Association has launched a major new initiative aimed at making it easier, quicker and cheaper for franchisors and franchisees to settle disputes.

The Mediation Panel to be launched in Auckland today (11th December 2002) makes available for the first time a group of franchise-trained mediators who are able to help address disputes within the context of the ongoing relationship between franchisee and franchisor.

The dispute between Australian-based Dymocks Booksellers and a New Zealand franchisee, which was recently settled by the Privy Council, reportedly cost $4.4 million in legal fees and took five years to resolve.

‘The Mediation Panel represents a huge leap forward for franchising in this country,’ says Robert Fowler, the Chairman of the Franchise Association. ‘While statistics show that the level of serious disputes between franchisor and franchisee affects fewer than 1% of the 14,000 franchised units in this country every year, the impact of those disputes can be significant. They cost time, they cost money and they take away focus from the business on both sides. The Mediation Panel can help ensure that the disruption of a dispute is minimised for all concerned.’

‘When I became Chairman of the Association, I was surprised at the number of calls I received from people who wanted to know how to resolve a dispute with a franchisor or franchisee. Most of these calls were from non-members of the Association, but it made me very aware of the damage that disputes cause.’

The Association’s Code of Practice, which is mandatory for members only, requires that franchisors should include a dispute resolution clause within their franchise agreement and provides a suggested procedure for handling disputes. ‘For non-members, not only may their franchise agreement not include such a clause but even if the franchisor and franchisee do agree to go to mediation to resolve a dispute, where do they begin? The Association’s Mediation Panel, which is available to non-members as well as members, provides the starting point,’ says Mr Fowler.

In the event of a dispute, the parties may approach the Association and request a mediator from the Panel. A small fee is applicable for providing this service: this is included in the payments for the mediation. The terms of mediation will be agreed by both parties prior to the mediation process.

All members of the Mediation Panel hold at least the following qualifications:

1. They are all professionally experienced as mediators

2. They have completed the Franchise Association’s course on mediation in franchising.

3. They are current members of the Franchise Association of New Zealand and bound to uphold the Code of Ethics of the Association in their own dealings.

‘The appointment of the Mediation Panel demonstrates the concern of responsible members of the franchise sector to ensure that the industry governs itself wisely for the good of all concerned,’ says Mr Fowler.

‘We urge franchisors and franchisees who are not yet members to join the Association, and we look forward to receiving applications from prospective franchise mediators throughout the country to go through the training and join the panel.’

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