Wondering what a Franchise Dispute Resolution is all about? Wait, first understand the meaning of a Franchise Dispute.
The case may be deemed in dispute and the dispute resolution process may be initiated if the franchisor declines to terminate on the terms suggested. The franchisor is once more compelled to give justification for the denial. notice of disagreement.
How do Franchise Disputes occur? How can Franchise Dispute Resolution help?
Franchise disputes generally occur, when there is instability in the franchisor-franchisee relationship. A survey conducted shows the main causes of franchise disputes.
5 major aspects lead to franchise disputes and thus require franchise dispute resolution.
#1. Absence of diligence on the part of franchisees and franchisors
Although franchises are frequently criticised for not doing their homework, the research found that some franchisors also need to do better.
Poor franchiser due diligence can have the following effects:
- inadequate methods for franchisee recruitment.
- faulty assessment of the franchise-ability of the business model
- inadequate funding for essential support services.
- unreasonable expectations for the price and duration of designing and delivering efficient support systems.
Franchisees who don’t exercise due diligence create inflated expectations and more frequent franchise disputes.
#2. Recruitment of Franchisees by Third Parties
Poor franchisee recruitment procedures, which may involve using third parties if their financial relationship with the franchise doesn’t go beyond the initial sale, also contribute to disputes and franchisee unhappiness.
#3. Lack of communication
Another significant factor in franchise disagreement is poor or ineffective communication.
#4. Market Situation
Conflict and franchisee satisfaction in a franchise business can be impacted by market conditions.
The study uncovered numerous instances where potential franchisees were kept in the dark about market conditions, like rising competition.
#5. Personal conditions put forth by Franchisees
Franchisees frequently experienced financial and personal demands, as well as changes in their situations, which frequently led to unhappiness and conflict.
In every business, problems can arise from time to time between you and your customers, suppliers, partners, employees – even other business owners (franchise).
These disputes can be resolved quickly and efficiently by using our franchise dispute resolution services. Sparkleminds has set out a clear process for the resolution of disputes between a franchisor and a franchisee.
Steps to resolve Franchise Disputes
Disputes can occur when running a franchise system for several reasons. A franchisee might, for instance, abuse your intellectual property or fall short of its minimum performance requirements.
In any case, you should make an honest effort to find a solution. This calls for you to act responsibly and refrain from doing so for arbitrary or irrelevant reasons, such as disregarding the legitimate interests of your franchisee.
5 important steps to be taken to resolve a franchise dispute.
#1. Notification to the other party
Any dispute must be raised in writing, whether it is by you or your franchisee. However, the Code mandates that you attempt to settle your disagreement with the franchisee first by laying out:
- the dispute’s character
- the result you desire
- What decision will resolve the conflict?
The failure of your franchisee to adhere to the terms of the franchise agreement will frequently give rise to a dispute. When appropriate, you should provide a formal breach notice to the following parties to identify the following:
- your franchisee’s responsibilities under the contract
- what your franchisee did to violate this commitment.
#2. Quick Response to feedback
The formal dispute resolution process outlined in the Franchising Code will be triggered by the sending of a disagreement notice. For a period of 21 days, the Parties shall attempt in good faith to resolve the Dispute.
This typically entails exchanging messages and showing up to meetings to discuss how your franchisee violated this duty.
#3. Opting for Alternative Dispute Resolution
Let’s say you’ve written to your franchisee about the conflict, but you are unable to resolve it within the allotted 21 days. The alternative dispute resolution procedure, which can involve mediation or conciliation, can be used in that situation.
Another option for settling a franchise dispute is arbitration. Compared to conciliation and mediation, it is a more official process. Normally, an impartial arbitrator hears both sides’ arguments before deciding how to resolve the conflict.
An alternative dispute resolution procedure might not always be the best option to settle the conflict between you and your franchisee. However, considering the expenses and time associated with litigation, going to court should always be a last resort.
How to avoid Franchise Disputes?
The best approaches to reduce franchise disputes are the open and prompt sharing of information and the explanation of both parties’ expectations before the signing of the franchise agreement.
According to research, a better understanding of the responsibilities in the franchise partnership can help the franchisor and franchisee build stronger levels of commitment and trust while reducing conflict.
Sparkleminds Role in Franchise Dispute Resolution
- Listen to both parties (put yourself in their positions).
- Ask for documentary evidence to verify the facts.
- Understand your legal obligations – research relevant laws and regulations.
- Negotiate face-to-face calmly and professionally.
Our team of experienced franchise dispute resolution procedure specialists/advisors are an integral part of our franchise team. We advise on all stages of the dispute avoidance and resolution process from pre-contractual disclosure documents audits of franchisee recruitment materials and training on precautions to avoid the risks involved.
Minimizing the exposure to misrepresentation and breach of contract claims against the franchisor. We give initial troubleshooting advice and ultimately advise on mediation, litigation, and arbitration by our experienced franchise dispute solicitors.
Franchise Dispute Cases
Early dispute resolution input is serious. We advise on matters such as dissolution, managing franchisee performance issues, and injunctive relief to prevent competition with the network. This also includes the strategies to avoid escalation of network-wide franchisee unrest.
These alternative dispute resolutions help in solving minor disagreements in a parliament manner. If disputes do escalate, our franchise dispute lawyers have substantial experience in
- and litigation – including enforcing post-termination non-compete obligations
In addition to our significant dispute expertise, we regularly advise clients on disputes arising out of international franchise relationships and roll-out programs.
To sum up,
We regularly advise clients on franchise disputes in India. We have significant experience with franchisee class actions and have successfully represented groups to re-negotiate their franchise agreements, obtain damage relief, free themselves from contractual restrictions or buy out the business from the franchise.
The last method of dispute resolution is going to the court of law. In some cases, this may be the only way to find a solution although it is the costliest and the process can take years.
This method is what both franchisees and franchisors should look at as a method of last resort. Call us today and get your problems out of the way.