Don't Get Mad, Mediate

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.

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