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29 Comments

I think that's what makes BMM so great...

...franchisees can gain insight into the styles of different attorneys vs. just a self serving spin resume on a .com lawyer website.

I apologize if 'the story' attempted to generalize the motives of attorneys. My situation with my franchisor and my first attorney is certainly an anomaly. I don't pretend that I don't know and understand that it was my John Hancock on a contract I didn't comprehend that put me in this situation to begin with.

My current attorney is trying by every means possible to amicably settle my franchise situation and genuinely wants to keep it out of court. He's screwed my head on straight and has provided invaluable straight talk advice on strategies, opportunities, and threats in a very fair (almost too fair) retainer structure.

Peter Silverman's picture

I understand your

I understand your frustration.  And it's hard for me to figure out exactly what happened in the story so as to comment.  There are lots of moving parts to situations like this, and the only way to make the system better is to unpack the different parts and consider them each on their own. 


If a franchisor wants to play hardball, that's the franchisor's choice.  There may be good or bad reason for it, and it might be wise or unwise, but it's a choice.  That's not lawyer collusion; it's a business choice.


If I'm representing a franchisor or a franchisee and they tell me they want to win the case and do whatever it takes, I will do so.  When I've been in that situation, the franchisor or franchisee has had good reason to take that position.  They expect me to tell them if that's not the case, and I do so.  But that's part of what it means to provide good counsel.


My sense is that if the culture and process of dispute resolution is changed, prospective franchisees will look for systems that embrace faster, cheaper, better, fairer, dispute resolution procedures.  And a franchisee bar will develop that is known for being able to handle disputes aggressively and well within the new dispute resolution rules. 


My goal with the blog is to think through carefully how to develop the new culture and process of dispute resolution.  I appreciate your comments.  They make the discussion real, and I hope other business owners chime in.

Ray Borradale's picture

Failure is not an option

Ten days ago I received an email from a franchisee determined to establish an IndFA.  He was very emotive and intent on confrontation.  I haven’t heard back from him as yet after directing him to franchiseeassociationmanagement.com and a few related blogs here at BMM.  

From his email it appeared he may not be the best choice to play a major role in coordinating or recruiting for an IndFA; however it seemed that this particular network had an urgent need for one.

I just cannot accept that any franchisee network from any franchise system does not need a united voice.  Even the best systems will benefit greatly and an investment returned many times. 

Those in the path of systemic franchise abuse better understand that without such an association the likelihood of getting totally rolled in the course of time is as high as the likelihood of waking tomorrow. 

The issues of lazy and cheap and free-riding franchisees needs to be dealt with but the attitude and approach of those who first consider establishing an IndFA must be based in a full understanding of what IndFAs can achieve and where they can fail miserably.  Failure is not an option.

I would not mind hearing from readers who are existing franchisees within networks that don't have an IndFA. And I wouldn't mind those who do explaining that the former are flamin idjits.

RichardSolomon's picture

WRONG! There is no moral.

There is only the lesson - which is -----


1-  Because of the law and the economics, and the configuration of franchise agreement provisions, it is senseless to participate in a regimen in which individual franchisees, having become victims because of the combination of dishonesty and their failure to get the pre investment help that could have saved them from the disaster, to take on franchisors one franchisee at a time.  IF ANYONE DISAGREES WITH THIS STATEMENT THEY ARE SIMPLY AN IDIOT.


2-  There is one way left to impose discipline upon a bad franchisor - DISCIPLINE IS THE TRAINING THAT MAKES PUNISHMENT UNNECESSARY - and that is pervasively supported group action - no one laying in the weeds hoping for a free ride. Forcefully grouped franchisees can discipline tough franchisors using business tactics not prohibited by franchise agreement clauses or by any law.


The reason Marines can deal successfully with overwhelmingly larger opponents is that they engage as a united and competently directed force. People in the right cannot be defeated by anyone in the wrong so long as they keep on coming.

Interesting...

...so the moral of the dispute resolution/mediation blog story is...don't kill the lawyers, know how and when to most effectively use them.

Sir-yes-sir

RichardSolomon's picture

Lock and load, Baby!

The only real hope for franchisees other than a charge of a very light brigade is AN AGGRESSIVELY MANAGED INDEPENDENT FRANCHISEE ASSOCIATION.


Remember - You heard it here first!

Solomon franwad bootcamp

Gunnery Sergeant Hartman: How tall are you, private?

Private Cowboy: Sir, five-foot-nine, sir.

Gunnery Sergeant Hartman: Five-foot-nine, I didn't know they stacked shit that high.

RichardSolomon's picture

I like that. Good post "Guest". It has absolute nothing to do

with the mistakes of the franchisee who bought a bozo deal that won't work for him, or the mistakes of the franchisor that he may be covering up with aggressive defense, or the fact that the franchisee could possibly be wrong and should not be making a fight on the facts du jour.


It's all about a conspiracy of lawyers to extract revenue from the pain of the parties. Since it is perfectly impossible for either party to be at fault, it just has to be the bloody lawyers.


I agree with you. Life aint fair. In a righteous world, franchisees would be able to charge lawyers for the privilege of representing them, and lawyers would line up to bid for the bloody honor.


There oughta be a law.

Law and dispute resolution is controlled by an oligopoly

or a mafia of sorts. This is a true story:

A franchisee lawyer submitted a dispute resolution claim to a very famous franchisor lawyer firm. The franchisor lawyer firm calls the franchisor like he's supposed to, and the franchisor says 'no I'm not settling'.

The franchisor firm calls the franchisee attorney and says "here we go again, you just paid for my kids college".

The franchisee is forced to mediation before arbitration because of the contract terms. So the lawyers made somewhere between $40 and $60k for the formality.

In this model of billable hours collusion - why fast track any dispute resolution?

Law OPEC: Only Pussies Embrace Compromise

Ray Borradale's picture

You're right Bob

within franchising abuse in Australia proportionally our women have bigger bawlz.

The Franchise Council of Australia constantly suggest I have a lot in common with Sir Les;

Bless their hearts  ...

Bob Frankman's picture

One of my very favourite Aussies

When I think of buying a franchise in Australia, I think of Dame Edna. That is to say, all is not as it seems on the surface.

She, a trade association in her own right, is self-appointed to oversee franchise quality control.

Ray Borradale's picture

One of my very favourite Americans

There is the technical reality of today’s franchising and dispute resolution.  But it ain’t workin for many da small folk.

We can still holler and shout but we have to light the lamps that shed the light on corruption, injustice, ineptitude and abuse of power. When we do, you will see the villains scurry into the woodwork the way roaches do when you turn on the light. Frank Serpico

I find much of what this champion has and continues to fight has parallels in the influences on franchising;

'We must hold our lawmakers accountable and our courts responsible, or democracy and freedom of speech in America will soon become extinct.'

Transparency in franchising will reach an effective level when the best demand it;

'We need good role models, and they have to start at the top.'

The greatest enemy is any government attack on, and lack of support for, moves to clean up the obvious franchising filth;

'Today it is becoming harder to speak out, with the inception of the Patriot Act, the president [Bush] has legislated free speech to be a crime.'

There is a lot to be said for character building; Vincenzo Serpico [father to bureaucrat]

'He picked up a hammer and said, ‘Get out of here you son of a bitch and don’t come back no more.'

One for Richard;

I'm [not]retarded - I mean I'm [not] retired.

Frank Serpico; Big Brother, Getting Bigger

I don't mean to intrude on American sensibilites but I see Frank Serpico's challenges as very similar to many around the world and definatley in franchising.

michael webster's picture

Dispute Resolution Techniques

Peter, my own sense of the literature is that there are a number of techniques that mediators use, but there is no nice categorization of them and no simple theory uniting them.

Peter Silverman's picture

I'll look forward to your

I'll look forward to your paper.  I've found that the literature on deal negotiation is strong and plentiful, but the literature on dispute resolution negotiation is weak and scarce.

michael webster's picture

Stand corrected

Hmm, I stand corrected if the written agreement covered the entire discussions.

Richard is right

I myself was pumped up to sue by one attorney for what I believed was the possibility to obtain lost future profits for a franchise business (somewhere between $600-$800k in a conservative model). I was ready to take down the franchisor with my 'strong case'....I was pitched on suing, whistle blowing...you name it...all the while the hourly clock was ticking because, what the hell, the contract allowed for recovery of attorneys fees.

Then a real attorney came in and made me realize just what a moronic premise the lost future profits strategy turned out to be because the business hadn't ever made a profit.

Talking me off the litigation ledge took time and patience but the real lawyer was successful.

Not all lawyers are equal - and not all clients are completely stupid when given insight into the real machinations of legal proceedings.

michael webster's picture

Deal Techniques

Peter;

1.  I don't believe that any mandatory CLE works, mediation included.  But negotiation exercises can help you spot similar quicker a good way to frame a problem, and alert you to cognitive traps which force you into seeing only the competitive version of the problem.

2.  Yes, the cooperative law practice as a model does make sense for franchising.  It is important to develop those type of processes, which will likely differ from the family law ones.

3.   The basic technique in "Getting to Yes", exploring interests over positions, only works well in treaty formation type of deals.   It doesn't work so well when rights are inserted, except for family law.

It may work in the negotiation of a franchise contract. 

But there are many other techniques available in deal negotiation.  Oddly, I am putting together a list of some basic ones for a short introductory paper.  However, the most important, in my opinion, mediation technique is to simply continually as:

"Why not both?  Why cannot each party have want it most wants?  Understand how to make this impossible outcome more reachable."

Paul Steinberg's picture

On being SOL

I'd like to have Peter's clients.

Most of mine are by now sharp enough to go with flat (transactional) or tiered (litigation) billing. Private individuals and small businss owners are far more comfortable and far less likely to file billing complaints if they have a fairly good idea as to the legal fees going in. Most of my problems are with the expenses, since clients invariably get fixated on the "low" end of an estimate given at the outset.

Richard raises a point related both to the quality of work performed by an attorney and to his billing practices. Quality is subjective, but itemized billing for work which was never done--or padded bills--is troubling.

I am surprised that none of our comments have disputed the basic premise as to a client who is unwilling/unable to fund litigation and merely wants to attempt to bluff a settlement. Assuming arguendo that a client seeks to pursue such a strategy, it is still a very dangerous practice for an attorney not to give written warning as to statute-of-limitations issues.

In NY State, it only costs $205 to file the complaint and a few bucks for process service. If you are running against the SoL, you are well-advised to draft and file both as a tactical matter (to increase leverage for settlement) and as a practical matter.

If the client subsequently does not have funds to pursue the action, it can always be dropped or settled--but if you miss the SoL, you are truly SOL.

RichardSolomon's picture

Maybe one should decline to represent everyone who isn't

immediately willing to come down off his "attitude"? I don't think so. In my experience there are frequently people who at first are at "kill 'em all and let God sort 'em out", and who are then implacable. I have sometimes been told by such people that if I bring up compromise again I will be replaced.


I think that if I go along for a while I will have a later chance to counsel conciliation/settlement. A few of those kinds of folks turned out to be my best repeat clients - one a mud Marine who had fought his way across the Pacific, island to island.


He hired me after firing some silk stocking outfit he thought were not being aggressive enough. My ex wife  was in that other firm and met him on the elevator on his way out of the building. He told her he was going to find the meanest sonofabitch trial lawyer he could find, and she gave him my phone number.


In the end I represented his company in several matters that were very tough situations, and over time gained credibility with him. His local counsel back home is still a very good friend of mine. The old guy passed away several years ago and we miss him. He had the notion - ridiculous, I know - that as long as he treated people honestly he had the right to be treated that way by them.

Peter Silverman's picture

Negotiating seminars a panacea?

To serve business needs, the dispute resolution process needs to become faster, cheaper, fairer, better.  My hunch is that learning negotiation techniques can help so long as it's institutionalized in a movement like cooperative law or something similar, but I don't think that mandatory seminars on negotiation techniques would make much a dent.  If you had a magic wand, what would you do?


 


More narrowly, are you talking about techniques beyond Getting to Yes?  If so, which ones?

RichardSolomon's picture

He never tried to resolve anything. He just jobbed the file.

There was never any negotiation with the opposite party seeking any resolution of anything (per his billings).


He aint like any "most of us" that I know.

Sorry, Michael

but this attorney stated in writing that negotiation with the franchisor was from experience nearly impossible (not true per FDD and other franchisee experiences with different attorneys) and litigation would be the only likely means to obtain results....

Hopefully this attorney is not like most of you.

michael webster's picture

Both

He is a genius for trying to resolve a claim without costly litigation; he is a bum for not clearly having the oral agreement memorialied in writing.  In short, he is like most of us.

michael webster's picture

Trial Lawyers as Mediators

Peter, the length of a trial even by an experienced attorney is determined by how many propositions in the decision tree the party needs to prove to win their case.  Trials are a process designed to allow some but not all relevant information to be put forward to an adjudicator.  The process is designed to produce a single truth from various different points of view.

Modern mediation is orthogonal to the trial process.  The focus is on treating differences as the departure for mutually profitable trades.  Differences are not resolved, they are the basis for economic trades.

The experienced trial lawyer who can turn dispute negotiation, which is largely about compromises and remains within the court model of producing a single truth that all parties can live with, back to deal negotiation will be in demand.  But, that will require some fundamental re-thinking and learning of negotiation techniques.

He was a genius...

until the client caught him and exposed him as a bum.

Ray Borradale's picture

Excellent blog Peter

When it seems that way too many franchise dispute outcomes are decidedly wrong, unfair and/or outrageous, whether those outcomes reflect loses or wins or debatable resolutions that, had they have been handled by ethical and experienced franchising lawyers, could have produced a different and more cost effective outcome.

Unlike those who would suggest we simply accept the limitations of the ‘system’, Peter seems to be suggesting that if it can be better than work toward making it better.  Now that is refreshing. But it goes against the more common acceptance of ‘it is what it is’.

Time and again franchisees are referred to as naïve and/or somewhat unsophisticated in the ways of the franchising world and they should just ‘grow up’ and accept what is, at many times and for many reasons, obviously very wrong.  And in today’s and yesterday’s environment that is virtually the way it must be but that does not mean it has to be the same tomorrow.  

So called Quixotic attempts to achieve change are often laughed at and yet throughout history peoples have challenged abusive windmills and achieved change.  People should not pity or denigrate the Don Quixote’s ‘fools’ of the world; pity those who will accept all that is laid before them no matter how sick that is.

In franchising much of dispute resolution is undeniably sick and particularly for those that cannot afford to participate and therefore do not bother much to the delight of the ‘establishment’  that is franchising.

Thank you Mr Silverman you Quixotic fool you.  It strikes me that there are many of your breed here at BMM whether some would admit it or not. You might say the closet is full of 'em.

RichardSolomon's picture

Genius or bum? A lawyer with a big rep in franchise dispute

resolution takes on a client to handle a dispute with a franchisor against which he previously prevailed when representing other franchisees of this franchisor.


The lawyer, and the associates working with him on the matter fail to take action within the time limit provided and the claim is - for all intents and puposes - lost because it wasn't assert in time.


This well known lawyer bills the client for preparing a demand letter to have been sent to the franchisor (14 hours to prepare the letter). The lawyer also prepared a draft complaint to be filed in the matter against the franchisor - but he does both one month late. The materials necessary for the lawyer to know what the situation really is were all in the lawyer's possession more than 14 weeks before the time for asserting the claims ran out.


Faced with a malpractice claim, this famous franchise lawyer claims that the client and he had agreed that no suit was ever to have been brought - on grounds that the client could not afford to pay for the work. No such arrangement was stated in the retainer agreement or in any correspondance between the lawyer and client. No documents in the lawyers' files contains any record of any such arrangement not to sue.


Is this lawyer a genius (he knows all about frachise law and dispute resolution) or a bum?

What about the geniuses?

A lawyer in Illinois was found to have billed a divorce
client for time spent having sex with her! (An Appellate Court made him refund that part of the fee.)
And that same lawyer as later appointed to the Illinois
Supreme Court’s Committee on Character and Fitness!!

Anyway, a dispute process has so many steps and calendar coordination of each, that fast tracking dispute resolution is nearly impossible. I don't even think it matters if the lawyer is a genius, a bum, or an amateur.

Another impediment

Bad clients who don't want the right advice; they want "justice" and somone to "pay" for their percieved slights.

They WILL dump the good attorneys for the "bums" who tell them that they are in the right and desrve compensation for all of the injustice heaped upon them by the evildoers who will be brougth to task for their deeds.

As long as this mindest exists, the bums will flourish.