state level and are based on state-specific contract laws, which may require that we work with local counsel in that state. Other times, franchise disputes are handled through arbitration which tends to be handled virtually due to COVID-19. Whether a dispute is handled through mediation, arbitration or litigation, there is usually several depositions of owners and salespersons to address allegations of fraud andmisrepresentation as well as lots of discovery and document production. How can franchise owners best avoid disputes before they arise? There are a few ways to avoid disputes in franchising. The first is for the franchisor to make sure that their franchise disclosure document is well written by an attorney who has handled franchise matters. We often see franchise disclosure documents written by attorneys who have little to no experience in franchising. These documents typically have several areas that are not compliant with federal or state franchise regulations. The second way is for a franchisor to be diligent during their sales process. Many WWW.LAWYER-MONTHLY.COM | APR 2022 MY LEGAL LIFE - JASON POWER mistakes happen during the sales process when a franchisor discloses more than they are permitted to disclose or not enough. These issues can lead to claims of fraud and misrepresentation which could be avoided, in most instances, with more due diligence. Along with this, if franchisors and franchisees are more open and honest with each other, then a lot of issues could be prevented. We see many cases where a franchisee does not disclose, or is not asked about, their past experience or financial position in enough depth, which leads to some franchisees buying a franchise without having adequate experience or sufficient funds. The best way to avoid disputes before they arise in franchising is for both franchisors and franchisees to do their due diligence when deciding to sign a franchise agreement. There are many instances where franchisees suffer “buyer’s remorse” which leads to disputes, so having a thorough evaluation process before someone buys a franchise is a good way to help prevent disputes. During a franchise relationship, one of the best ways to avoid disputes is for franchisors and franchisees to work together for the betterment of the franchise system and understand that a cooperative approach is in everyone’s 30 best interests. Some franchisors will sign a franchisee, train them and then never support them, which often leads to legal issues. On the flip side, many franchisees buy a franchise and then refuse help from the franchisor, which in itself leads to problems and disputes. If franchisors and franchisees operate with a collaborative mindset, they are far better suited for success. We often see franchise disclosure documents written by attorneys who have little to no experience in franchising. If franchisors and franchisees operate with a collaborative mindset, they are far better suited for success.
RkJQdWJsaXNoZXIy Mjk3Mzkz