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How to use mediation to control the outcome of a franchise dispute.

Updated: May 16, 2023

Franchise mediation

The ability to be in control is central to the concept of franchising. Franchisees are independently minded individuals who wish to have a greater level of control over their working lives than they would have as an employee. Franchisors regard the ability to control their business as fundamantal to their role.

For a franchisee, the control comes at the cost of accepting more responsibility, risking their investment in the franchise and working longer hours. But they willingly accept all this for the benefit of being in control of their own business.

Using franchise mediation to resolve disputes

Franchisors are similarly motivated; they devise a successful business model and recruit franchisees to expand. In every case they remain in control of the brand and how the franchisees operate their branches. Franchise agreements are drafted to give them the ability to control the network to protect the brand. Control is right at the top of their agenda.

Mostly this works well but occasionally there are disputes. If a resolution can’t be negotiated

dialog breaks down and solicitors are consulted, In most commercial situations if this doesn’t

produce a settlement the next step is litigation. At this stage, what is mostly overlooked is the

fact that in a legal action the parties relinquish control to a court where a ruling will be made

by a judge.

Franchise disputes can be resolved with franchise mediation

It is true that during the trial the parties can regain some degree of control if they re-start negotiations and try to reach an out of court settlement. And this often happens but by then a great deal of time and money will have been spent. Needlessly.

Thankfully almost all franchise agreements contain a mechanism for avoiding costly and time-consuming legal battles. It is called; Mediation. And mediation puts both parties right

back in full control of the outcome.

The British legal system strongly supports alternative dispute resolution (ADR) because it

recognises that courts are constantly overloaded with cases and litigants must wait months

for a hearing date. ADR includes Mediation and Arbitration.

An arbitration is quicker and less expensive than a court case, but it still requires the parties

to give up control; in this case to an arbitrator, who will make a judgement. A mediation is

different; the mediator is neutral and simply assists the parties to reach a settlement. And it

works, producing success rates above 85%

A mediation is easy to organise, is usually concluded in one day and is consequently far less

expensive than litigation. Of significant importance to both franchisors and franchisees is the

fact that they remain in control of the outcome.

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