Advisory Aug, 17 2009

Resolve those ever arising franchise disputes

Are you a franchisee or a franchisor who is suffering from strained franchise-franchisee relationships? If yes, then article below can be a great help to you in settling the franchise disputes

By Pallavi Majha
Chief Sub Editor
Resolve those ever arising franchise disputes

Clashes and misunderstandings are a part and parcel of any relationship. Then, how do you think franchise relationships can remain untouched with these. Franchise disagreements crop up due to various reasons.

Franchise agreements are intricate commercial deals that last for a fixed amount of duration. During this duration there are number of situations or circumstances that leads to franchise disputes. The most common cause of disputes in franchise relationships is when franchisee starts believing that he is not receiving proper support and guidance from the franchisor or when the franchisee fails. And also one of the usual reasons of the franchise disagreement between the franchisee and the franchisor is when franchisee realizes that the franchise is no more profitable to him and starts selling other things in his franchised outlet or establishes an independent firm. Franchise relationship is based upon trust and faith and under such conditions franchisor will loose faith in the franchisee.

A misleading financial benefits claim also leads to strained franchisor franchisee relationships. The franchisor is blamed to have provided wrong information only to encourage the franchisee to sign the franchise agreement at the initial stage of taking up a franchise.

Handling the disputes

The best possible way to settle the disputes is to look for a mutual commercial solution than taking a legal action. If a commercial solution cannot be found then the franchisors and franchisees need to resolve the dispute by way of mediation. Even when this mode of settlement fails then the franchisee and the franchisor can take a legal help.

Before embarking on any course of action it is advisable to opt for a legal advice to know, how strong or weak your legal position is and to obtain an understanding of the likely costs involved. Try to obtain a clear understanding of the costs involved so that there are no subsequent obnoxious surprises.

Avoid disputes

The best advice is to try hard to avoid disputes. Take a long hard look at the situation and obtain impartial and objective advice before you go too far down the dispute route – there are too many situations where the dispute simply has too much momentum to stop and, lastly, look at commercial ways of resolving disputes rather than referring to the courts.

Hopefully the article provides adequate help and guidance to the franchisors and franchisees in settling down their franchise disputes.

Related: Assess the right opportunity

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