Let’s start by accepting that not all franchisors act ethically and not all franchisees follow the
franchise model and work hard to support and grow the brand. But this blog isn’t about bad
franchises, it is about those that are successful for both the franchisor and the franchisees.
As in any work environment, even in the best franchises, a disagreement can sometimes
arise. If it is not resolved it can develop into a dispute and if that isn’t settled one party or the
other will probably reach for the franchise agreement and then call their solicitor. Either way
this will generally lead to a ‘dispute resolution’ clause in the franchise agreement. Most such
agreements set out a process for resolving disputes and state that before litigation is
commenced the parties will engage in a mediation. This will involve appointing a mediator.
The choice of mediator is very important. The symbiotic relationship between a franchisee
and a franchisor is almost unique to the franchising industry and a far higher success rate
will be achieved by a specialist franchise mediator.
So; how can everyone win in a mediated settlement?
In a mediation the parties are in control of the outcome as opposed to a court case in which
they delegate the decision to a judge. A court always produces a winner and a loser. In
many cases two losers because costs awards can sometimes appear to be unfair and both
parties will have invested a large amount of time and emotional energy that is impossible to
recover.
A mediator’s role is not to pass judgement but to help the parties to find a solution for
themselves. In some situations, this could be to agree a compromise, in others it might be to
help one party to see that their position is not as winnable as they thought it was.
Sometimes, it could assist one of the parties to see the futility of winning a pyric victory. If the
mediation is successful a large amount of time and money will have been saved by the
parties either compromising or arriving at a similar decision as a court; but without the legal
costs.
Ethical franchisors and diligent franchisees have much to lose by litigating because it is
difficult to re-establish a working relationship after they have faced each other in court. The
advantage of a mediated settlement it is that the parties, rather than the mediator, who have
decided how the dispute should be settled. This greatly assists them to put the matter behind
them and in many cases return to an amicable working relationship.
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