We Know Franchising
Maintaining Long-Term Relationships
The relationship between a franchisor and a franchisee is unique in the business world. The very core of a franchise relationship is built around the concept that a franchise relationship is a long term “marriage.” When a dispute arises, neither party can simply walk away. Because this relationship between franchisor and franchisee is so unique, sometimes, typical dispute resolution approaches (litigation or arbitration) can be counterproductive to actually solving a problem. Why? Because the end result is an inflexible decree of a third party who may not actually understand franchising.
As a result, a dispute resolution approach that assures a mutually agreeable solution and strives to maintain the relationship is best for franchising. Only mediation can accomplish this.
From the franchisor’s perspective, there is good reason to include mandatory early mediation as part of a comprehensive dispute resolution process. For starters, a franchisor that can resolve a conflict through early mediation has no obligation to disclose the dispute or the outcome in the Franchise Disclosure Document (FDD). Additionally, by settling a dispute early, a franchisor is able to keep a conflict from festering and reverberating throughout its franchise system.
From the franchisee’s perspective, mediation is ideal. It is fast, inexpensive and guarantees that the franchisee will have an outcome with which they agree. Frequently, franchisees will feel intimidated by the franchisor in any dispute resolution process. Mediation helps to level that emotional playing field.
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Finding Creative Solutions
Mediation is a formal procedure which requires the consent of all parties to the dispute. Many franchisors provide for mediation in their franchise agreements and it is frequently required prior to litigation or arbitration. However, mediation does not need to be included in the franchise agreement in order for the parties to engage in mediation.
Mediation has resulted in a high success rate of settlement or negotiated solutions. One of the reasons for this high success rate is that mediation allows for creative “out of the box” solutions that may not be available in a more structured litigation or arbitration. Mediation Masters’ team of mediators specialize in franchise disputes.
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