Mediation in franchising is catching on as a tool to resolve tensions,
maintain the relationship and move past resentment prior to the threat
of, or institution of legal action.
Franchising is a relationship-oriented business, not just the boots on
the ground, day-to-day operation, but a relationship that must be maintained
between a franchisor and franchisee. Much of this is built on trust; trust
that the franchisor will carry their end of the bargain, protect the brand,
the system and look to the future viability and success of the overall
system. Trust that the franchisee will carry forward the systems and procedures
put in place to ensure uniform operation, customer experience, product
quality and service, those necessary systemic policies that insure the
brand delivers consistently.
When disputes arise, the tendency is towards animosity and escalation,
but that is not healthy, nor productive in a business setting, and especially
not in a franchise setting where the parties may be attached for up to
20 years. I have noticed a trend in my practice of being called in by
franchisors and franchisees long before the threat of legal action is
leveled, as a means of maintaining the relationship, but still addressing
and resolving conflicts. Leading with a resolution minded approach deescalates
the conflict and allows both sides the opportunity to be heard in a non-confrontational
manner. It creates a forum to educate the participants on the interests
guiding each side and brings all those involved into the process of creating
a resolution that satisfies the parties, and in many cases improves the system.
Many franchisors understand the need for dispute resolution to maintain
harmony amongst the franchise system but rely on their field or business
personnel to carry out that task, which in my experience tends to exacerbate
the problems. Franchisor personnel tasked with maintaining and enforcing
systemwide policies are rarely able to step outside of those constraints
to aid in escalated disputes between franchisees and franchisors.
Franchisees and Franchisors that find themselves in a substantial dispute
with their respective counterparts should consider discussing mediation,
whether the franchise agreement has provisions for it or not, as a means
to expediently address the conflict, maintain the relationship and work
towards a joint resolution.