Franchisee Dispute Resolution Retainer Agreements

There seems not to be a standard approach to agreements with new single franchisee clients. In my experience, what comes out of form books and continuing legal education seminars is simply unsuitable. There is no one size fits all. Auto accident retainer agreements do not fit business dispute retention.

I am seeing more junk than substance when people come to me with complaints about their present lawyers. It is rare indeed that your dissatisfaction with your lawyer is the result of malpractice. Maybe you simply don’t have the rights and options you wish you had and are unhappy for that reason.

In any event, I offer to the franchise bar a model single franchisee dispute retainer agreement. I think your use of this approach will result in more informed clients and fewer disagreements about what you agreed to do and how you agreed to go about handling the matter.

This does not cover multi franchisee retention. I have provided a tutorial on that subject at http://www.franchiseremedies.com/franchisees-in-litigation.htm .

FRANCHISE LAWYER SINGLE CLIENT DISPUTE RESOLUTION RETAINER AGREEMENT – THE MULDOONIAN MODEL

This agreement sets the terms of retention of {Name of Law Firm} by {Name of Client}, regarding the assessment of Client’s difficulties with its franchisor {Name of Franchisor} and the identity of options for the resolution of difficulties.

In our initial meeting, Client stated that {insert specific matters claimed by the client that the client believes represent grounds for action and improper conduct by the franchisor}.

Client will provide us with the franchise agreement and all amendments and supplements, all disclosure packages received from the franchisor in connection with the purchase of the franchise and all sales and marketing materials provided by the franchisor together with materials provided by the franchisor during discovery day. Client will also provide all information relating to the problems identified above that the Client may have or have access to, regardless of format.

Client purchased this franchise on {Insert date of purchase}.

We will review the materials provided by Client and confer in person and/or by telephone and email to sort out and assess the particulars of this potential dispute and arrive at our recommendations and our assessment of the options available and their likely suitability to Client’s capabilities.

If, at the conclusion of this work, it appears that Client has a strong position that may justify taking action, we will discuss the range of actions and come to an agreement regarding what to do and in what order.

In consideration of the work to be done, Client will pay a retainer in the amount of $______ at the signing of this retainer agreement. This initial retainer is intended to cover the initial evaluation of the information and providing our assessment to the Client. We do not envision incurring any expenses in this initial work, but if any is to be incurred it will be with Client’s prior approval and prepayment. We are not obligated to incur expenses without prepayment.

It is most likely that our initial recommendation, if there is a serious problem that deserves attention, will be to try to negotiate an acceptable resolution with the franchisor. If Client wishes our representation in this effort, we will accept retention for that work in the prepaid amount of $      , plus expenses, if any as provided for above.

These two retentions will be flat fee retainers in which Client will not be charged by the hour and we will not be required to account for the time spent. {Counsel should keep track and record hours spent just as if this were an hourly retention.}

It is unlikely that your franchisor is going to refund all or part of what you have paid and cancel your franchise agreement without being confronted in trial or arbitration. The relief contemplated at this point is not likely to include refunds of fees and other payments made to the franchisor. It is also unlikely, except in extreme circumstances in which Client has sufficient resources to cover litigated or arbitrated formal dispute resolution proceedings, that the Client will be brought back to the same circumstances enjoyed prior to purchasing this franchise. Most franchise disagreements do not result in terminations of agreements and refunds of money paid. We will consider that as an option if it is seriously needed and the resources are available.

This agreement does not obligate us to represent Client in any formal dispute resolution proceeding such as mediation, arbitration or litigation. Should Client wish us to provide such representation, that will be negotiated and provided for in a separate retainer agreement.

Should the matter involve other franchisees, whether to discuss it with them and whether to consider their participation in this relationship as additional franchisee clients of this firm will only be after we have discussed the favorable and unfavorable potentialities of that action. Sometimes it is better for Client’s interests to do that and sometimes it is not. Client agrees not to discuss this retention or any matter that we consider with anyone else without our prior consultation and approval. Such conversations with third parties often leads to worsening of the situation rather than the acquisition of allies in Client’s cause. Client will not communicate with the franchisor regarding this matter without first consulting with us so that we are aware of what is going to happen and have had an opportunity to discuss whether that is appropriate and how it should be handled. Every inquiry about the matters being considered here, regardless of the source, will be referred to us without comment by the Client.

Either of us may terminate this attorney client relationship at any time. In the event of such termination, if we have kept records of time spent on the matters contemplated hereby, we will be compensated at the hourly rate of $     , plus expenses, and any remaining amount of the retainer after that deduction will be refunded to the Client.

This retainer agreement is made in the State of {Insert lawyer’s home state} and will be governed by the laws of that state. Any dispute between the Client and us will be brought only in the courts located in {insert lawyer’s home town} and/or in the facilities provided by the State Bar of {insert lawyer’s home state}. {Substitute an arbitration provision if that is desired in lieu of what you see}.

This retainer agreement includes all the terms of agreement between you and us. There are no other terms, offers or promises except those specifically stated here.

The effective date of this agreement is ____________________________.

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