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Why mediation works to resolve franchise disputes |
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Mediation to resolve franchise disputes has been a core component of the Franchising Code of Conduct since its introduction, and yet it still draws criticism from time to time among franchisees, franchisors and even service providers who claim the outcomes are unsatisfactory. Unlike the drawn-out and expensive process of going to court, where a decision will be made that someone is “right” and someone else is “wrong”, the process of mediation doesn’t result in a black and white outcome where one party wins and the other party loses, but instead, results in an outcome that both parties can live with. At the time such outcomes are reached, the mediator summarises the outcome in a written agreement that both parties agree to adhere to, and sign accordingly. Criticism of mediation generally falls into two categories. The first is that the cost of mediation is excessive, particularly if one of the participants is financially distressed and struggling to make ends meet. The second criticism is that the outcome could have been markedly different if the issue had gone to court, and therefore the mediation has sold one or the other party short on the outcome they might otherwise have been able to achieve. |
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Franchise sector awaits recommendations from Code Review |
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Submissions to the current review of the Franchising Code of Conduct are now online, and make for interesting reading. Out of 73 submissions lodged with the inquiry, the majority have been published except for approximately 13 submissions that were lodged in confidence. If the number of submissions received is any indication of satisfaction (or otherwise) with the Code, then it is worth noting that the 73 submissions received is almost exactly half the number received by the last federal inquiry into the Franchising Code, held in 2008. It’s a long bow to draw, but a lower number of submissions can potentially indicate a higher level of satisfaction by participants in the sector with the operation of the Code, particularly following the amendments introduced on 1 July 2010 as a result of the last inquiry. |
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How failed growth expectations destroy credibility |
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The Byron Bay Cookie Company recently announced ambitious plans to expand to the United States and the United Kingdom, as well as to increase its number of stores in Australia. Later that same week, the production company at the centre of the business was placed in the hands of administrators. While administration in itself is not the kiss of death for a business - the process of administration can help nurse a business to good health - it does highlight that something was fundamentally wrong with the business model or management’s execution of that model for the business to go into administration in the first place. |
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