Many franchise agreements include provisions for mandatory mediation. While mediation is intended to be neutral and provide an opportunity for the parties to resolve their dispute without going to court, the reality is that the requiring mediation benefits franchisors in many cases. So, as a franchisee, what can you expect in mediation? Franchise lawyer Jeffrey M. Goldstein explains:
5 Important Facts about Franchise Mediation
1. There are Costs Involved
One of the reasons why franchisors require mediation is because there are costs involved. Franchise agreements will typically require franchisees to attend mediation in the city where the franchisor’s headquarters are located, and they will typically require both parties to share the costs of the venue and mediator. In many cases, these costs alone will be enough to dissuade franchisees from initiating mediation in an effort to assert their legal rights.
2. Both Parties Must Participate in Good Faith
When attempting to resolve a franchise dispute through mediation, both parties have an obligation to participate in good faith. This means that neither party can ignore relevant evidence or refuse to consider reasonable options for resolving their dispute. As a practical matter, however, both parties are free to reject potential resolutions, and it is extremely difficult to argue that a franchisor has failed to meet its obligation to mediate in good faith.
3. You May or May Not Get a Resolution
Unlike arbitration and litigation, there is no guarantee that mediation will end with a resolution. If the parties are unable to come to terms, then they will need to pursue other options—typically either initiating arbitration or filing a lawsuit in court. In many cases, franchisors will leverage this to their advantage as well, as they know that most franchisees will be willing to accept a less-than-fair settlement rather than incurring the additional costs of formal dispute resolution.
4. You Don’t Have to Settle for a One-Sided Result
Regardless of the circumstances presented, when you go to mediation you do not have to settle for a one-sided result. In mediation, neither party is required to settle if they don’t want to. If, after considering your franchisor’s position, you think that its settlement offer is unfair, you are well within your rights to reject the offer and fight for a better outcome.
5. An Experienced Franchise Lawyer Can Help
Despite the challenges of mediating a dispute with your franchisor, an experienced franchise lawyer can help. An experienced franchise lawyer will be able to present your arguments effectively, ensure that your franchisor participates in the process in good faith, and help you make informed decisions regarding any potential resolutions.
Request an Appointment with Franchise Lawyer Jeffrey M. Goldstein
If you are facing a dispute with your franchisor and your franchise agreement includes a mandatory mediation provision, we encourage you to contact us for legal advice. Franchise lawyer Jeffrey M. Goldstein can explain what you need to know, and he can represent you in mediation if this is your best option. To get started with a free, no-obligation consultation, call 202-293-3947 or request an appointment online today.
