One way or another, I’ve been involved in franchising for a very large part of my business career. I believe that franchising is one of the best ways that entrepreneurs can, relatively safely, pursue the “American Dream.” However, just like in any close relationship, there are disagreements in franchising.
But, that’s OK – we must understand and accept that disputes and disagreements are a part of life. They are a part of business. They are inevitable – a natural course of interacting with friends, neighbors, strangers and transacting business. Disputes are not something about which we should be ashamed or embarrassed. If we don’t have disputes, we, as humans, are not interacting, growing, engaging in commerce or exchanging ideas.
Franchises frequently refer to themselves as “families”… and I think that analogy is appropriate. But remember, families have disputes, squabbles and arguments. Now, in a traditional family some sort of an ongoing dispute resolution system has evolved naturally. Maybe the problems get settled around the dinner table; maybe everybody’s OK with Dad making the decision; maybe Mom and Dad have a regular “date night” and that’s the best way to handle it; maybe the kids decide. But, an ongoing system is in place for handling those problems. When families don’t have an ongoing “relief valve” for regular, every day tensions and problems, then the problems accumulate and build up until they erupt into a much bigger issue.
Within our franchising “families” we need a similar kind of “relief valve.” Mediation is that relief valve. Franchisees and franchisors should be quick to go to mediation. Both parties should encourage it. Small problems should be solved quickly, inexpensively and mutually so they don’t accumulate, fester and become big problems.
Mediation is fundamentally different than any other dispute resolution process. Not only is it faster and less expensive, it 100% guarantees that the parties will agree with the outcome! Remember, mediation is a voluntary meeting of the parties to discuss their problems. There is no binding conclusion or agreement unless both parties agree. If the mediation is not successful, litigation or arbitration can always be a next step. The reason for success in mediation is that there is a third party “neutral”, the mediator, who helps the parties listen, understand and exchange information that, typically, has not taken place previously.
In mediation, the same rules of evidence, procedures and formalities that exist in the litigation or arbitration process do not apply. As a result, many past actions and, seemingly, irrelevant facts, that might be discarded or overlooked in a court process, can be brought up in mediation. Why is this good? Because, in many cases, these tangential and overlooked concerns are some of the fundamental underlying seeds of discontent in the dispute. Only by addressing all of these issues can a true, complete and sometimes, very creative, resolution to the problem be discovered. Neither litigation or arbitration can accomplish this type of complete resolution to a problem. Furthermore, in separate conversations, the mediator can help both parties understand the true cost of not reaching an agreement.
If you are in franchising, contact a mediator now – when you don’t need one. Eventually, almost certainly, your franchise relationship will be improved with a neutral third party (mediator) helping you communicate and understand each other over some dispute. Remember, disputes are OK – it’s how you handle them that makes the difference. Let the “relief valve” of mediation be the prevention of litigation.