How is a dispute between a franchisor and franchisee resolved?

Author: Shelley Nadler

answered by Shelley Nadler

Legal director at Bird & Bird

Shelley Nadler writes:

The first thing a franchisor and franchisee in a dispute situation should do is have a face to face meeting to see if they can find a solution that will satisfy both parties.

In some cases, a franchisor will accept a solution that involves the franchisee selling its business. If this does not resolve the dispute, the franchise agreement should set out how disputes are dealt with.

Often, franchise agreements specify that the parties have to seek to resolve the dispute by mediation before litigation in the courts is commenced and will specify the body dealing with mediation.

Mediation is where an independent mediator encourages the parties to resolve the dispute themselves through discussions in order to seek a compromise. Mediation is confidential, quicker and less costly than going to court.

The cost of the mediation is shared by the parties.

The mediator does not give an award or make a decision if an agreement is reached by the parties to settle a dispute.

If a settlement to a dispute cannot be reached through mediation, the franchise agreement will state if the dispute is to be dealt with by the courts or through arbitration. In either case, you will need to instruct lawyers.

Arbitration is similar to litigation, as there is an individual who acts as an arbitrator to decide the issues and makes a decision that will be binding on the parties.

Shelley Nadler is a legal director in Bird & Bird’s international franchising team and has many years’ experience of advising on all aspects of franchising.

Want to be your own boss? Start today!

  • Relooking

    Relooking is a beauty franchise, offering a variety of skin care and anti-aging treatments... find out more

    £18,000 Minimum Investment
  • Sweets and Treats Vending

    Sweets and Treats Vending is a confectionery distribution franchise company... find out more

    £9,950 Minimum Investment
  • SuperGreen Solutions

    SuperGreen Solutions is an advisor, supplier, and installer of energy-efficient solutions to… find out more

    £178,000 Minimum Investment
  • Wikane

    Wikane is a business development franchise, specialising in working with SMEs to help them… find out more

    £38,000 Minimum Investment

You have pending

More from our business portfolio

  • Global Franchise