Mediation as a means for resolving franchise disputes was the topic of discussion at a recent International Franchise Association meeting. The process was lauded for its ability to resolve disputes in a cost-effective and efficient manner while allowing both parties to gain valuable insight into each other’s claims. Mediation was seen as a way to either preserve the business relationship or end it amicably by uncovering mutually beneficial solutions that arbitration or litigation cannot offer.
However, despite its advantages, mediation does not always work due to parties’ reluctance to engage in discussions beyond their litigation demands or insufficient framing of the claim. Stories were shared about mediation failures that were attributed to the execution of the process by the mediator and the selected counsels. The mediator’s skills, emotional intelligence, and commitment to the process were deemed critical in ensuring the success of mediation.
Two key points emphasized during the discussion were the importance of a joint introductory meeting and the submission of written statements before the mediation. The introductory meeting was seen as an opportunity for both sides to be heard, set the tone for the proceedings, and establish the commitment to the process. The absence of a written statement from one party could lead to a lack of respect for the process and hinder the mediator’s ability to help the parties bring their best to the table.
Preparation and planning before mediation were highlighted as crucial elements in achieving a successful outcome. It was noted that some parties view the mediation process as solely the responsibility of the mediator, but in reality, counsel’s role in preparing for and optimizing the mediation opportunity is essential. Pre-mediation investigation, discussions with the other party, and developing a strategy were all seen as crucial steps in creating a real opportunity for a successful mediation result.
The discussion also touched upon the idea of including a mandatory mediation provision in franchise agreements. While parties can always agree to mediate a dispute without such a provision, having it in the agreement encourages them to consider the possibility of moving forward and finding a resolution. The success of mandatory mediation lies in how the process is executed. By focusing on the key points raised during the discussion, such as the importance of preparation, joint meetings, and submission of written statements, any mediation effort can be significantly enhanced.
