Suing Your Franchisor? But What Does Your Franchise Agreement Say?
Most franchise agreements contain several provisions relating to dispute resolution; and, as you might expect, most of these provisions are designed to be franchisor-friendly. The typical franchise agreement will include some or all of the following:
Mandatory Mediation
Before you can sue your franchisor in court, you may first have to submit your claim to mediation. Some franchise agreements even require the parties to submit to mediation before they can go to mandatory arbitration (see below). Mediation is a form of non-binding alternative dispute resolution (ADR) in which the parties attempt to work together with the help of a neutral third-party mediator to amicably resolve their differences.
Mandatory Arbitration
Arbitration differs from mediation in that the neutral third-party (in this case, an “arbitrator”) makes a decision on behalf of the parties. The arbitrator’s decision may or may not be binding, and in some cases franchise agreements will actually call for a decision to be made by a panel of three or more arbitrators.
Splitting the Costs of ADR
Many franchise agreements state that the franchisor and franchisee must split the costs of mediation or arbitration. While this may initially sound fair, keep in mind the balance of power. Franchisors generally have greater access to capital than their franchisees, and while the cost of paying an arbitrator (or panel of arbitrators) for a week of their time can be a significant expense for the average franchisee, it is usually just a drop in the bucket to their franchisor.
Attorneys’ Fees
Another common franchise agreement provision states that the prevailing party in any dispute must pay the non-prevailing party’s attorneys’ fees. Even if you are fairly confident in the outcome of your case, the results of ADR and litigation are never guaranteed, and taking on the risk of paying both parties’ legal fees can weigh heavily in the decision of whether to pursue a claim.
Choice of Jurisdiction and Venue
Finally, your franchise agreement also likely specifies the geographic location where any mediation, arbitration or litigation must occur. And, guess what? It’s not in your hometown. Most likely, you will have to travel to the franchisor’s location in order to attempt to enforce its obligations. But, even if your franchise agreement happens to call for a neutral location, the cost factor is once again designed to help insulate the franchisor.
Jeffrey M. Goldstein represents clients in commercial complex litigation matters across the country. Mr. Goldstein is recognized as one of the top franchise litigators in the country. Mr. Goldstein has extensive experience in representing clients in state and federal courts in cases involving fraud, RICO, antitrust, encroachment, and wrongful termination. Mr. Goldstein also has an active practice in state and federal appeals cases. Mr. Goldstein practices as a franchise lawyer in complex litigation cases representing only franchisees and dealers. Although Mr. Goldstein appears in courts in a pro hac vice capacity depending on the state, he also has direct access to New York, Pennsylvania, Massachusetts, and the District of Columbia (DC), Washington, where holds Bars for those states.
In addition to his litigation practice, Mr. Goldstein counsels and advises clients in franchise and distribution matters. Mr. Goldstein has represented clients across the United States in almost every leading franchise system. Mr. Goldstein also is retained to counsel many national independent franchisee associations. Mr. Goldstein has also served as an expert witness in several federal court franchise cases.
Mr. Goldstein graduated magna cum laude from Bucknell University with dual degrees in Philosophy and Economics in 1979. In 1983, he obtained his Juris Doctorate from Boston University School of Law, where he also simultaneously received his Masters Degree in Economics.
You can reach Jeffrey M. Goldstein at (202) 293-3947 or email jgoldstein@goldlawgroup.com. His firm's website is www.goldlawgroup.com.
The Goldstein Law Firm is one of a handful of law firms in the country that represents only franchisees & Dealers. Not every franchise lawyer is a franchisee lawyer. Almost all law firms specializing in franchise law represent either solely franchisors or both franchisors and franchisees, but not solely franchisees & dealers. The philosophy of The Goldstein Law Firm is that all of our franchise attorneys' effort should be focused on advocating for the rights of franchisees, not on cutting new law for franchisors who are very ably represented by the largest law firms in the world. The Goldstein Law Firm offers its franchisee and dealer clients a consistent and unclouded commitment to the cause of franchisees. On a national basis there are merely a handful of franchise lawyers who truly represent only franchisees & dealers. As a franchisee lawyer, Jeff Goldstein is one of these rare franchise lawyers who does not also represent manufacturers and franchisors.
GLF specializes in:
General Franchise and Distribution Antitrust violations
Franchise Price-Fixing claims
Wrongful franchise terminations
Franchise Encroachment claims
Franchise Territorial violations
Franchise Dual Distribution competition
Franchise Menu Pricing disputes
Unfair Franchisor competition
Franchise and Distribution Trademark violations
Franchise and Distribution Post-term covenant not to compete restrictions
Wrongful franchise default cases
Franchise Supplier overcharging claims
Franchisor tying arrangements
Franchisor Fraud and Misrepresentation Claims
Franchise Disclosure Document Defects
(202) 293-3947
In those cases in which Jeff is retained to litigate franchise law questions, he appears in courts around the country either in a Pro Hac capacity, or through his direct membership in the Bars of New York, Massachusetts, District of Columbia, Washington, and Pennsylvania.
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