The VSBC has continued to see an increase in the number of disputes referred to it arising from franchise relationships.

In 2003, the first year of operation for the VSBC, the office did not have one dispute involving a franchisee among applications received for mediation. In recent months, it has handled applications for mediation that could affect more than 200 franchise operations across Victoria. It appears that increasingly franchise disputes are being attracted because of the low-cost, speedy and high quality mediation service.

The VSBC has continued to emphasise the importance of information and education for potential franchisees. In particular, franchisees need to carefully read and fully understand the contract, and be clear about the expectations of the franchisor. Before signing, franchisees should have a lawyer, accountant or business consultant carefully review all aspects of the documentation.

To the extent that the VSBC has identified any common theme in franchise disputes, it could be observed that communication failure and understanding deficiency appear to be at the fore. In this context, in matters before the VSBC there have been recurring instances where franchisors failed to communicate their expectation adequately and/or franchisees’ understanding of the business was lacking.

Franchising disputes can be dealt with under the Small Business Commissioner Act 2003. If you would like to refer a dispute to the VSBC, download the application form here.