Many franchises run successfully with only minor problems between the franchisee and franchisor. But sometimes disputes can arise. What is the best way to handle these disputes?

Most disputes arise primarily because of lack of communication. It is important to keep lines of communication open at all times so that minor niggles are resolved easily and quickly.

The first point of call is to raise the matter verbally to the franchisor or their representative. Do not make your dispute public or raise any threats at this point. Make sure you raise the matter clearly, politely and in a fair manner.

If this approach fails to yield a satisfactory result then it is time to put your position forward in writing direct to the franchisor. Again try and look at both viewpoints when writing the letter and make sure you send the correspondence by registered post.


In your letter clearly identify what the problem is, the outcome you are seeking and what you hope to achieve. Make sure you keep a copy of this letter.


It can take anywhere between one and three weeks to get a written response depending on how large an organisation you are dealing with. Be patient as the grievance will have to be analysed and if possible solutions created.


If this approach fails then now is the time to write to the franchisor to look at appointing a mediator to analyse the problem and find a solution. How this works will be clearly laid out in your franchise agreement. Usually both parties pay half the cost of the mediator.


The mediator will look at your grievances in an unbiased manner and hopefully help to resolve the dispute in a short and timely manner. Many problems that seemed impossible to resolve have been solved very quickly once a mediator has been appointed.


The mediator's role is often not to dictate the solution but rather try and get the franchisee and franchisor talking so that they can reach an amicable solution. If this approach doesn't work then the mediator might be forced to give their own judgement.


Often the mediator will ask for some payment upfront and an agreement will need to be signed that deals with how the mediation is to be handled and the relative costs of both the parties.


Each party will have to bear their own costs for travel arrangements and accommodation. The time and place of the meetings will have to agreed by the three parties concerned.


Finally if even this approach fails then the only solution left is to seek redress through the courts. This final strategy can be extremely expensive and should only be attempted if the funds are there and the franchisee is sure of his or her case.


If the grievance is not too detrimental to the running of the business then it is perhaps better to give up and resign yourself to the fact that the franchisor has won the argument. Bear in mind that the franchisor invariably tends to have very deep pockets and can drag on the case for a very long time!

Naz Daud is the founder of CityLocal Business Franchise Opportunity
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