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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Comments

I be dumb

Every inquiry about the matters being considered here, regardless of
the source, will be referred to us without comment by the Client.

Knowing franchisees in dispute as I do I'm not sure whether 'without comment' is realistic or am I misunderstanding this part?

Franchisees should appreciate an agreement written in such a way that they can understand what the hell the ball game is all about rather than finding out after they have lost almost everything to an asshole franchisor and then blowing the rest on an inexperienced and/OR a pretend lawyer [acting in their best interests] and then not really understanding what the hell went wrong.

It seems I spend half my week telling franchisees that their lawyer is a jerk and then sending them to someone who knows his/her siht.  And they are not easy to find.

You are correct. Most people cannot resist being interviewed.

However, they must be told that loose lips can sink the ships and they must be made to agree not to get involved with extraneous inquiries.

In this way I can better serve their needs if they comply. If they don't, and they run their mouths, they get to  suffer the consequences and can't come back to me with accusations that I failed to warn them about the risks of the big mouth.

It is not uncommon for franchisor apparachiks to call pretending to be from a news media operation seeking to interview them sympathetically to give publicity to their cause. These calls are recorded - always - and what they say is usable against them in dispute resolution for impeachment and other purposes - as exceptions to the hearsay rule.

When they get inquiries, they have no idea who is calling and can't tell the truthfulness of the representations any more than they could tell the truthfulness of the representations used to get them to buy the bozo franchise in the first place.

But you are correct that no matter what you may explain to some people, they just aren't smart enough to deal with the realities. Think of people who speed up when they come upon a sign that says sharp curves ahead, reduce speed. Its the same syndrome - Hey I can handle this. I'm not some gullible child. Yeah, right.

It looks like it could be

and it smells like it could be  ... so why would anyone taste it?  Ok; they just don't know that 'it' exists?  Even though they've been living in 'it'? Yep; shooting off one's mouth is a dumb way to find out just how deep 'it' is.

I suppose this is an appropriate opening for me to express my

enormous gratitude to the many dozens of franchisees and franchise victims who almost daily provide me with inside information about what is going on inside franchise systems they belong to.

Even some of the folks I may have roughed up in here provide me with extremely helpful information. It helps me help those franchise folks who do decide to come to me to help them with their problems, and it greatly enhances the value of my FranWhack program.

I go to great lengths to keep the sources of this information from becoming known, so they know what they tell me will never come back and bite them in the ass.

Thank you all for this unbelievably valuable assistance. 

Suing me aint the pure unadulterated joy some folks think

it might be. I bite hard and I don't let go until checks are written.