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(d)if a mediation process is being used to try to resolve the
dispute -- both:
» (i) making the party's intention clear, at the beginning
of the process, as to what the party is trying to achieve
through the process, and
» (ii) observing any obligations relating to confidentiality
that apply during or after the process.
(2) To avoid doubt, if a mediation process is being used to
try to resolve the dispute, subclause (1) applies whether the
mediation is conducted under this code or otherwise.
However, contrary to the common misunderstanding about
good faith, this does not mean that the parties must accept
all offers made or that they must forgo their own interests in
negotiation. Where parties do negotiate in good faith, there
may be surprising outcomes reached in the mediation for both
parties that may not be possible through the court process.
In our role at the Office of the Franchising Mediation Adviser
(OFMA), we encourage parties to continually act in good faith
prior to, during and after the mediation process.
We often receive enquiries or questions from parties about
what it looks like to uphold good faith while protecting personal
interests, as these may seem incompatible. An important
thing to note is that good faith negotiation does not mean that
a party must constantly make allowances that put them at a
disadvantage. Where parties and their representatives embrace
and support the mediation process, we see remarkable
developments and agreements made.
Mediation is a process in which the parties to the dispute
have a voice in the outcomes that are achieved, and,
ultimately, in a binding agreement that meets the needs of
both parties. The process allows for creative options and
the opportunity to either maintain and develop the franchise
relationship in the future, or, where appropriate, to terminate
a franchise agreement amicably.
It is important that the mediator assists in the process of
empowering each party in the mediation process so that
they are engaged and willing to negotiate in good faith.
The mediations that are conducted through OFMA follow a
facilitative model, whereby the mediator assists the parties by
facilitating a discussion towards the resolution of the dispute,
rather than dictating a decision for the parties.
In the mediation, the mediator assists the parties to identify
the issues in dispute, generate options around these issues,
consider alternatives, and attempt to reach an agreement that
will meet the underlying needs and interests of both or all
parties to the dispute. When we appoint mediators, we ensure
that the mediator has the necessary experiences or skills; for
example, we appoint a mediator in light of the issues raised and
the parties involved, including whether there are legal or other
Mediators do not make decisions about who is right or wrong,
or what the best outcome should be. A key advantage to
mediation is that the parties have significant control over the
process and the outcome. The parties hold the decision
making power, and the mediator helps to bring the parties
together by establishing a framework for the negotiation within
which all parties agree to participate.
Mediation can achieve a binding settlement agreement at a
fraction of the cost of court action. About 75 per cent of OFMA
mediations reach settlement.
In order to participate in good faith, parties and their
• make sure that they have authority to settle the dispute
• meet the mediator before the mediation, or at least via
• prepare for the mediation well
• allow joint discussion during the mediation
• allow the parties to talk, not just get a lawyer to do all the
• use conciliatory language
• listen and acknowledge the other person
• be problem solvers.
OFMA encourages good faith mediation in the interests of
both parties, and certainly to avoid the financial penalties and
adverse publicity involved in not participating in mediation in
If you would like to know more about mediation under the
Franchising Code of Conduct, or if you have a dispute enquiry,
please see the contact details below.
Office of the Franchising Mediation Adviser
Freecall: 1800 150 667
An important thing to note is that
good faith negotiation does not
mean that a party must constantly
make allowances that put them at a
Mediators do not make decisions
about who is right or wrong, or what
the best outcome should be
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