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Mediation; nobody loses, everyone wins.

Updated: May 16, 2023

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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