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FRANCHISE DISPUTE RESOLUTION – MEDIATION

Bundy Law Firm PLLC Nov. 22, 2011

We Can Work it Out: Using Mediation to Avoid Litigation

Some people attempt to minimize franchise disputes by saying “it’s just business” or “it’s only money.” These people have never been in a business dispute. For the business owner, franchisor or franchisee, the business is a livelihood, a part of their identity and source of pride. When they find themselves in a franchise dispute, it’s very personal. Unfortunately, traditional litigation and arbitration cannot address the emotional elements of a franchise dispute. Accordingly, parties to litigation frequently report dissatisfaction with the result, regardless of the legal outcome. Mediation may offer a better outcome than litigation and could in some cases salvage the franchise relationship.

In a mediation, both parties, their attorneys and the mediator work together to address the issues and brainstorm outcomes. The mediator is a neutral party who works with each side to create a resolution. The process is entirely confidential and neither side can use settlement offers or other statements made in mediation against the other in litigation. Because both sides had a hand in drafting the settlement agreement, they are invested and more likely to abide by its terms.

Additionally, while a court or arbitrator can only impose legal remedies, a mediator can create settlements that go beyond the traditional injunctions, dissolution and damages. For instance, if the franchise relationship can be saved the mediator might suggest that the settlement agreement include additional training for the franchisee or other steps to improve franchise performance.

Finally, mediation gives franchisors and franchisees the chance to speak frankly about the dispute. A sincere “I’m sorry” or “I did not understand” may satisfy a potential litigant more than court awarded damages.

An experienced franchise attorney can help you determine whether and how to incorporate mediation in your dispute resolution agreement. A mediation provision in your franchise agreement might provide an opportunity to resolve franchise disputes without the expense of litigation.