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2 Minutes to find your Franchise Match

New internet headache for man-in-a-van franchises

April 13th, 2012 by Geoffrey Sturgess in Franchise Legal
Geoffrey Sturgess - Consultant Solicitor, Warner Goodman Commercial

Geoffrey Sturgess - Consultant Solicitor, Warner Goodman Commercial

A well known B2C franchisor has contacted me recently regarding a problem with an even better known provider of directory services.

The franchisees of this network are required to contact the directory service provider in order to organise their listings in its paper directory. The sales staff of the directory in question then offer an enhanced listing in their sister on-line directory and, and here’s the problem, a pay per click advertising service.

If the franchisee decides to go for the pay per click service the directory will provide them with a free “landing page” to which those who click will be directed and one or more URLs (web addresses) incorporating the name of the franchisee’s business. That of course is likely to be the same as the business name and registered trade mark of the franchisor.

This of course dilutes the brand of the franchisor because the landing page will look nothing like his corporate style and his franchisees will now be using his trademarks in their URLs.

What is worse is that if the franchisor is trying to direct traffic to his central site so that it can be distributed to his franchisees they will be trying to use the same adwords and he will be bidding against his franchisees when trying to buy them. In essence they will be competing in the same digital space for customers that would end up with the franchisee anyway.

He can probably force his franchisees to stop doing this by enforcing his franchise agreement:

  •  Only use my approved advertising material
  • Don’t use my trademark except as approved.

He could probably bring an action against the directory provider:

  • Don’t incite my franchisees to breach their contract with me
  • If you are the registrant of those URLs, hand them over to me as I have a better right because they contain my registered trademark

His franchisees are likely to be cross—after all they are paying good money for this service and there will probably be early termination charges.

Few franchisors would want to take on an international provider of directory services.

The franchisor in question has tried explaining the problem to the directory provider. They don’t understand. They have a valid arrangement with a local business. What concern is it of the franchisor?

The purpose of this note is the suggestion that franchisees should be warned about this practice and told not to get involved. Franchisors might also like to check that their franchisees are not already involved.

We would also be very interested to hear from any other franchisors with similar experiences.

For more information, you can contact Geoffrey at Warner Goodman Commercial on 023 8071 7424 or email geoffreysturgess@warnergoodman.co.uk

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Top 5 Tips on the Smart Way to Resolve Disputes in Franchising

February 6th, 2012 by Fiona Boswell in Franchise Legal
Fiona Boswell - Senior Associate Solicitor, Freeth Cartwright LLP

Fiona Boswell - Senior Associate Solicitor, Freeth Cartwright LLP

Successful franchising this year depends on  taking a smart approach to resolving your disputes.

1. Focus on the deal not the dispute

Courts are focussed on the dispute – mediation focuses on the deal. Mediation is  private – (no courts and potential bad publicity), cost effective – (no court costs orders); and fast – (no long waits for trials and court hearings).

If you choose to mediate you want to reach agreement rather than fall out.  Going to Court is confrontational – it is all about “winners and losers”. Mediation is about negotiation – it is taking a business approach to resolving tricky situations in a way that benefits both parties.

2. Act Early

We see franchise mediations that could have resolved easier and quicker if mediation had been considered earlier.

How early is early? Right at the start, when fee payments start to be missed and when the first rumblings of discord start to happen amongst the network.

3. Take the Business Approach

Ever heard the phrase – “cutting your nose off to spite your face” well that is generally what happens when you go to court. Once done you can forget ever doing business with them again. Mediation does the opposite.

It helps (a) Preserve the relationship (b) Prevent damaging your reputation as a good franchisor (this alienates your existing franchise network and deters potential new franchisees); (c) save you time and money – disputes divert management resource from taking the franchise forward.

4. Be Creative

Mediation is more flexible than going to court. You can:

  • Change the Payment Terms of franchise contracts
  • Change the Contract Duration – Reduce, extend it – build in breaks
  • Change your allocated territory
  • Explore exit options – eg buying the business

Ultimately mediation is a creative process – it allows you to explore to options that might not otherwise be available.

5. Build it in from the Outset

Ensure your franchise contracts and operations manuals contain appropriate dispute resolution escalation procedures. The fact that you have disputes is not a bad thing – It is the way that you deal with them that matters.

It is good practice and savvy business sense to consider how you will manage disputes when they happen.

Fiona Boswell is a Senior Associate Solicitor at Freeth Cartwright LLP and Head of FC Franchise Build, Manage, Grow, Exit ™ Unit. You can contact Fiona on 0845 070 3812 or e-mail fiona.boswell@freethcartwright.co.uk

Whilst every effort has been made to ensure the accuracy of this article, it does not provide complete coverage of the subjects referred to, and it is not a substitute for professional legal advice and should not be relied upon as such.
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Top Tips for Managing Franchise Disputes

November 8th, 2011 by Fiona Boswell in Franchise Legal
Fiona Boswell - Senior Associate Solicitor, Freeth Cartwright LLP

Fiona Boswell - Senior Associate Solicitor, Freeth Cartwright LLP

People fall out over money, especially when times are hard and margins are tight. Surveys confirm that litigation is on the rise. Here are some tips from our Franchise Team on the best ways to manage your disputes.

We all know that disputes absorb management time as well as cost money. How can you best position your franchise to stay out of trouble and to deal with disputes as effectively as possible when they do arise?

Here are some simple tips, with a little help from the famous…

  1. “The large print giveth and the small print taketh away” (Tom Waits)
    Know your own contracts and consider carefully any contract before signing
  2. “In theory, there is no difference between theory and practice. But, in practice, there is.” (Yogi Berra)
    Are your processes in place and adhered to? Do your carefully-worded contract terms apply to your dealings with the customer with whom you’ve just fallen out? Did they ever receive and agree these before you began supplying them?
  3. “It is a capital mistake to theorize before you have all the evidence. It biases the judgment.” (Sherlock Holmes)
    Evidence wins cases. Get witness statements signed before people move on. Identify and preserve relevant electronic and paper evidence at an early stage.
  4. “Life is about timing” (Carl Lewis)
    Say and write the right things at the right time. Having historic correspondence criticising your contractor’s performance and giving an opportunity for improvement will lend weight to your case when it all goes wrong and you need to part ways.
  5. “To jaw-jaw is always better than to war-war.” (Winston Churchill)
    Consider mediation: litigation snowballs and positions become entrenched very quickly. Mediation can re-establish dialogue and get parties looking to solve a problem together rather than having them at each other’s throat.
  6. “I run on the road, long before I dance under the lights” (Muhammad Ali)
    Be prepared. Come up with a game plan to resolve a dispute, as soon as you can, which assesses risk and cost and deals with how you are going to manage them.
  7. “A stitch in time saves nine” (anon)
    Know when to seek legal advice. Many disputes can be avoided and most cases are won or lost long before they get anywhere near the doors of court. Give us a call if you’d like to talk something through.

Fiona Boswell is a Senior Associate Solicitor at Freeth Cartwright LLP and Head of FC Franchise Build, Manage, Grow, Exit ™ Unit. You can contact Fiona on 0845 070 3812 or e-mail fiona.boswell@freethcartwright.co.uk

Whilst every effort has been made to ensure the accuracy of this article, it does not provide complete coverage of the subjects referred to, and it is not a substitute for professional legal advice and should not be relied upon as such.
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