The Benefit of Mediation Prior to Litigation

Mediation is not just for the resolution of litigation. I spend a fair amount of my practice mediating disputes that never see the notoriety of a lawsuit. The reason for this is many franchisees as well as franchisors understand that a festering dispute can disrupt business, the franchise system and the systems reputation. For the franchisee, mediation is a clear choice in getting past a dispute. Mediation is cost effective, quick and allows the franchisee to actually take control and be a participant in the resolution.

I have been asked; what is the benefit to the franchisor? The benefit to the franchisor, in my opinion, is much greater then to the franchisee. Franchisors are in the business of selling franchises and building a community of franchisees. Their reputation, how they interact with franchisees, support, training and getting past or resolving disputes all come into play when a prospective franchisee is evaluating an opportunity. If the franchisor is willing to mediate, it shows to the existing and prospective franchisees that they are concerned with resolution, and not as concerned with being defensive or one sided.

Franchisors additionally are able to manage and be a part of the resolution allowing them to craft solutions that may be more tailored to the situation. These solutions then get put in the "solution bank" to be thought of and potentially used at a later time, with a different franchisee, under similar circumstances. This methodology allows a franchisor to build resolution confidence, and build their skill set in handling issues with franchisees.

Once a discussion or dispute reaches a stalemate, mediation should be proposed by one of the participants. Most franchisors are willing to participate, understanding the benefit and need to get past the dispute and back to focusing on business. I am asked regularly by both sides to breach the issue, as a neutral, and gauge interest in mediating an ongoing dispute, and am typically met with positive responses.

Franchising is a unique form of business, the relationship is not easily dissolved, so like a marriage, working out differences can be imperative to the ongoing success of both parties. Franchisors need the trust of their franchisees to support and bring their trademark and system to life. Franchisees require the support of their franchisor to continue to develop and improve the system, as well as tend to the needs of the franchisees; a dispute that festers will only break down the working relationship and trust. Parties willing to work together to resolve problems, tend to have a better rapport and relationship, building a stronger franchise system.

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