Mediation is becoming popular not only in domestic franchising but also in international franchising. The success rates have made the method acceptable by both the franchisors and the franchisees.
For international franchising, the relationship between franchisors and franchisees are governed by an international franchise agreement.
It can be an efficient way to expand a franchise business. Same way, it is filled with challenges that need a great deal of thought.
In most cases, it is entirely difficult to decide dispute resolution requirements. This needs a franchisee to have the basics in case of a dispute.
International Franchise Disputes
International franchising is governed by international laws that dictate which procedures are to be carried out. This is due to the many legal issues to be considered when franchising.
In international franchising, mediation pushes the franchisor to handle the franchise disputes early, which helps to avoid costly discovery.
However, without a mediation clause in the franchise contract, no party is obligated or should be forced to mediate. Instead, each party should willingly agree to mediate.
If you have a franchise dispute, you can consider looking for firms for international mediation to help you decide whether to mediate before filing a lawsuit
No one should attempt international franchising without proper market analysis or critical advice from a franchise legal expert. A good franchise lawyer understands the need for mediation by:
- Knowing the value of settling a dispute early without litigation.
- Knowing when to use mediation to resolve or manage a franchise dispute.
There are few key elements needed for mediating a successful international franchising case; they include:
- Have a mediation clause in the franchise agreement: Although parties to a franchise agreement can resolve the dispute without having a mediation clause in the franchise agreement, having no clause makes it more complicated. Therefore, it is advised to have such a clause as it will place the franchisor and the franchisee into a better predisposition, and they will have a better leeway to solve the disputes. The clause is also helpful for limitations periods to which the legal action can be suspended. This helps to ensure the procedure doesn’t stop or delay other activities if no agreement is reached.
- The need to mediate may be initiated by one party to the agreement: If both parties agree to use mediation, the request for such may be initiated by only one party, and no agreement is needed for this action.
- The franchisee may have limited power to negotiate a change in the mediation clause as a franchisor decides whether they need mandatory mediation.
- Duty of good faith and fair dealing: According to American Bar Association, applying the act of good faith in franchising business can be pretty challenging. There must be good faith in mediation. The thing is, both the franchisor and the franchisee have to act in good faith when entering into a business relationship. This could include being transparent during mediation negotiation, disclosing about the thought of mediation in good time, having the readiness to make sensible counter offers etc.
Even if a settlement is not reached, mediation helps both parties generate a more sophisticated assessment of their risks and hence can decide whether to arbitrate or litigate.
It’s worth noting that mediation is unlikely to bear fruits if the franchisor or franchisee wants to show their strength in a particular case or obtain a jurisdictive ruling on any given law.
Where there is mandatory mediation, the franchisor is forced to be concerned with franchisees apprehensions before they invest heavily in other options.
A good lawyer can address such issues, such as the mediation’s location and suggest ways to lessen the costs involved. For instance, your franchise attorney may request that the mediation be held at the franchisee home city or discuss whether to perform an online mediation or a face to face mediation.
One major concern is getting a lawyer who is conversant with mediating franchise disputes. Such knows what rules will apply. Having such and getting a mediator who will respect the duty of good faith will bring out a favorable outcome.
The Bottom Line
There are issues you will have to consider for smooth international franchising. Your first option would be to look for an experienced international franchise attorney. Such can help you understand what is needed in case of any disputes.
Courts encourage parties to a franchise agreement to first mediate before they take a legal step. This means that even if there was no mediation clause present, such parties might end up mediating, increasing prospects of early settlement.
Anyone who chooses to mediate can ask themselves what value the mediation will bring to their case. International mediation should help to avoid the risk of poor litigation results, save on cost and the hustle involved in litigations.
If you have any concerns about international mediation, you can get in touch with an international franchise lawyer.