Whether you are a franchisee or a franchisor, starting to franchise is an important undertaking. As a franchisor, you will be investing significant amounts in establishing a framework and building your network. As a franchisee you are making an investment probably using your savings to fund that initial investment. Getting the right legal advice from the outset, is essential.
You wouldn’t buy a car without doing an HPI check, you wouldn’t buy a house without doing searches, so why buy a franchise without getting legal advice? Just as you wouldn’t want a dentist performing a heart operation, or a mathematics teacher giving you investment advice, the same way you should not get a franchise agreement off the internet or use a non-franchise lawyer for advice.
It may sound odd coming from a lawyer, but litigation should always be the last resort. It is expensive, time consuming and the result can never be guaranteed. Whether you are tempted to “teach them a lesson” or “set an example”; before you instruct the lawyers, make sure that your own house is in order. When it comes to litigation, the best form of defence is attack so make sure that if you decide to sue someone you don’t end up on the receiving end of a claim! Hard to believe but this does happen – a franchisor who sued a franchisee for unpaid franchise fee, ended up having to defend its own position and not only lost but then had to pay damages to the franchisee!
Don’t delay action – the longer you leave it, the problem is only likely to get worse and not better. Act promptly and make sure that everything is documented and followed up. Can the issue be resolved by putting additional support or training in place?
Taking emotions out is tough but consider your objective – if your objective is to find a resolution, even if that resolution is for the franchisee to exit the network, you are unlikely to get what you want if the language is accusatory and inflammatory. Focus on the objective and what would be most helpful or useful to achieve your objective. Remain open to a compromise – if by compromising you still achieve your objective, then that is still a positive outcome.
Consider enlisting help of an independent 3rd party. There are many professionals who can help facilitate a conversation. We often describe them as mediators. Mediation doesn’t necessarily have to be very formal but it can do wonders! If the franchisor is a member of the British Franchise Association (the BFA), then you may wish to consider engaging with the BFA dispute resolution process.
