Can a franchise broker mediate a dispute between a franchisor and franchisee?

Only informally and early. A broker can facilitate conversation and flag problems, but they are a paid intermediary, not a neutral mediator or attorney. Binding mediation or arbitration follows the franchise agreement’s dispute-resolution clause and uses a qualified neutral.

What is the most common cause of franchisor-franchisee conflict?

Mismatched expectations set during the sale, followed by financial disputes over fees and royalties. Many conflicts trace back to what a candidate was told before signing, which is why disciplined, compliant sales reduce later disputes.

Does our franchise agreement require arbitration?

It depends on how the clause is written. Many franchise agreements mandate mediation and/or binding arbitration and specify the rules and venue. Read your dispute-resolution provision before a conflict arises, because it controls your options.

When should litigation be considered?

As a last resort — when direct resolution and the agreement’s mediation or arbitration provisions have failed or are unavailable. Litigation is public, slow, and costly, so most franchise systems are designed to resolve disputes before that point. Building a franchise system? Reidel Law Firm drafts the FDD and franchise agreement — including the dispute, mediation, and termination provisions that decide how conflicts end — on a flat fee. Build dispute-ready franchise documents →

FRANCHISE LAW

Franchise Broker Conflict Resolution Checklist

Schuyler 'Rocky' Reidel July 13, 2023