I have a confession to make: I find disputes fascinating. I don’t go looking for them, and the quiet life is always preferable, but there is something about ‘strategy’, ‘tactics’ and ‘analysis’ which appeals to my competitive side. I have made no secret of this intrigue to friends and colleagues in the sector. As a result, I have shared a few battle stories with some of my fellow franchisors.
Although I am not a qualified lawyer, just an interested amateur, I do have a rather unique perspective on many of the most common issues that occur. I have noticed how a few small steps, taken at the right time, can save a lot of aggravation for both parties.
My guiding piece of advice is this: You should always consult a qualified lawyer as early as possible, and preferably one from the British Franchise Association’s (BFA) list of approved suppliers.
Here are some tips which should reduce the frequency of being involved in a dispute.
Write it down
Sounds basic, doesn’t it? To this day, I am amazed at the amount of people I come across where the audit trail behind serious arrangements is weak. Or, in some cases, is none existence. I was involved in a dispute recently where the conversation went as follows:
Me: You have to stop trading outside of your area. It is against the franchise agreement.
Former Franchisee: I had special permission from the previous owner.
Me: Great, do you have any evidence?
Former Franchisee: No.
Me: What, no email or letter?
Former Franchisee: No.
Me: How did this happen then?
Former Franchisee: She said ‘yes’ over the phone.
Me: And it wasn’t confirmed in writing?
Former Franchisee: No.
That’s simply staggering. As a result, that particular franchisee isn’t part of the network anymore.
Don’t make statements you can’t evidence
Business is tough at the best of times and particularly during the early days. You would be hard pressed to find a franchisor who could not relate to the pressure of closing down a franchise sale early in proceedings.
However, for me, Sin 101 is making statements during a franchise recruitment process that cannot be substantiated. This could be comments or exaggerations made about your own business success, contracts with third parties or financial expectations.
Unless you are from the 1980s school of sales, and have never watched ‘Wolf of Wall Street’, it should be self-evident that such an approach is both unethical and commercially foolish. Ultimately, you will lose out in the long run, leading to disputes with franchisees, as well as suffering serious reputational damage.
For any prospective franchisees reading this article, please undertake your ‘due diligence’. You should always ‘fact check’ the information you are being given. Ask for evidence, and independently verify what you are being told wherever possible. Professional scepticism is healthy. If a franchisor appears to be evasive with you, be cautious.
Remove all emotion
This is often the hardest thing to do and I don’t profess to be an expert. But, always remember, business is business. Disputes in franchising are rarely personal. Saying a person’s face is disappointing might make you feel better in the moment but, in reality, it won’t move the dial in terms of a resolution.
From time to time, you will come across well-resourced opposition that just have an axe to grind. However, this is rare. Be professional, be concise, stick to the facts and if it doesn’t need saying, don’t say it. Less is always more when trying to iron out your differences.
Don’t be afraid to ‘Do Nothing’
This is one of my favourite tips. ‘Do nothing’ is always a viable option. If a competitor opens a store across the street, what should you do? Do nothing. If a cheaper alternative service comes on the market: Do nothing, just stick to your original strategy. This, in many cases, is not a stupid tactic.
I have lost count of the number of times in a dispute the other party has made a threat: They might say: ‘If you don’t do X, by Y, we will do Z’. If the conditions are right, calling their bluff is delicious. The deadline passes and you know the truth: There is plenty of sizzle, but no sausage.
Don’t include nonsensical quotes in correspondence
What I am about to reveal is the truth, not fiction. The single best letter I ever received was when someone rejected my offer of settlement. The background to this dispute: I had secured judgement against an individual and was currently in the process of enforcing it.
This individual attempted to have it ‘set aside’ but his attempt was rejected. All his legal avenues had been exhausted. During the enforcement process, he is seemingly oblivious to the judgement that was issued three months earlier.
His letter read as follows: “We both wait patiently for the Court to issue a hearing date in order that the case you claim to have against me can be heard. To quote Sextus, alas, ‘the wheels of Justice turn slowly, but grind exceedingly fine’.”
Who on earth is Sextus? Who uses the word ‘alas’ in 2023? And how can you not know that this case is not already over?
I subsequently wrote back:
Thank you for the quote from Sextus.
I regret to inform you that the wheels of justice have already stopped turning, as you failed to Defend your Claim and subsequent ‘set aside’ application. To quote the District Judge: ‘It is ordered that X pays Franchisor the sum of £xx,xxx.’
We will continue our enforcement action.
I doubt anything I have shared here is unique. Many of the tales I hear are normally centred on one of these themes or a combination of them. Throughout my career, if I was to identify one factor that is present in any dispute, it is this: Poor communication.
If both sides take more effort and care to listen to each other, they would realise how narrow the issues between them truly are. And if you wish to know the best way to avoid such a dispute: Then try not to have one in the first place.
