Franchisee-Franchisor Conflict Resolution

In 2011 the Canadian Franchise Association (CFA) published this very informative article about conflict resolution between Franchisees and Franchisors.

This article speaks in detail about the steps that could/should be followed to resolve issues within a Franchise business model.  Their recommendations can be summarized as follows:

  1. Set up a face-to-face meeting with Franchisor
  2. Bring your issues to the Franchisee Advisory Council (FAC)
  3. Try mediation (voluntary and non-binding)
  4. Try arbitration (binding and both parties agree not to go to court)
  5. Go to court

The CFA has a very optimistic tone in this article and we are glad that Franchisors around Canada have been able to work in this reasonable way.  However, we have received numerous reports from the Vancouver area that some Franchisors have operated in such a manner that the idea of ‘reasonableness’ is far from reach.  One Franchisee from a coffee Franchise in Vancouver has reported to us that their Franchisor has established an FAC that not only doesn’t actively do any meaningful work, but they were also not given the authority to change the unknown agendas of the Directors.  Therefore, options #1 and #2 in the suggestion list above are not possible.

If the Franchisor has demonstrated that they are not willing to work openly and transparently with their Franchisors, it is very difficult to imagine initiating the voluntary and non-binding suggestion of mediation in #3 above.  For these Franchisees, it seems that either settling their matter out of court (arbitration) or suing the Franchisor for damages are their only remaining options – options #4 and #5 respectively.

Whatever the case happens to be for your Franchise business, we at the VCSFA agree with these reasonable steps outlined in this CFA article as a procedural means whenever possible.

Another very interesting point to be taken from this article is that the CFA has a kind of Ombudsman program.  Although we cannot speak for this program it is certainly something we are going to look further into, and we hope that the public will also give us their feedback if they have used this program.  Here is a direct quote from the article:

If agreement still cannot be reached, there are options. The Canadian Franchise Association (CFA) has an Ombudsman program, a free program available to all franchisees and franchisors in Canada. The Ombudsman will listen to one or both sides and try to facilitate communication. All discussions are completely confidential and done informally by phone. Contact the CFA Ombudsman at 866-443-8255.