Do You Know How to Preserve Your Franchise System?

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There are in every segment of our economy, at every moment of the day companies/people who sense that some significant project for which they bear responsibility is starting to move in a bad direction.

Whether it is a franchise system filling with disenchantment due to market changes for which requisite adjustments have not been found and made; or a fashion house trying to cope with designer disputes and threatened license terminations; dealers that need to be terminated in order to more effectively aligning the company's direction with its marketing strategy or foreign trade issues - how to build a more international network and mitigate exposure to foreign jurisdictions should things not go as planned - the list is endless - that movement from well being to impending serious difficulty arises.

The people to whom you regularly turn for guidance in more normal circumstances are less helpful when life starts to get tougher. They may have long tenure and vast company and specific industry knowledge as well as knowledge of the people involved. However, theirs is not responsibility for stepping away from the immediate picture and providing calibrated options that can with econometric reliability be sorted and prioritized.

Finally, let us assume that the situation/company/relationships now coming into higher risk are worth saving. Some are so desperate that the die has been cast.

Most of these relationships are founded upon written agreements containing clauses taught in law school or by long custom that are terrible impediments to braking as brinks are more closely approached. Feeling trapped by inopportune language, most law firms I have encountered advise the pulling of triggers, giving notice of claim or default, stated in those stilted lawyerese that so endears our profession to the rest of the world.

But contracts have other clauses, largely unwritten in the traditional sense. They have become incorporated into the business model of the agreement by the force of experience and change. Lawyers who can read often can't find these clauses due to lack of substantive insight. They may be legal scholars, but this isn't a law school final exam.

If pulling triggers for fear of being accused of not exercising one's rights and thereby losing them could without sacrifice of position be replaced, would you consider it? And what factors would you have to take into account to decide to take a more unorthodox approach to dispute avoidance that could save the deal/relationship/realignment project that you really wish to implement?

Begin with the metrics. The metrics are not a set of likely numbers if one approach is chosen. The metrics are differentials between performance number sets when alternatives are not only netted against each other, but considered in series. Yes. You can do both. If you know you can still fight if the preferred approach doesn't work, with no loss of position, could you ever even think of not doing this as I suggest you should?

Obviously this is not addressed to scorched earth egoists who like fiddle music in the midst of conflagration. Most companies are rational. It is to those rational companies that our approach makes the most sense. Few people are always or absolutely right. In most instances there is room for adjustment. The passage of time alone suggests market changes that make old agreements less suitable to modern issue resolution. Lawyers who believe only in contract language can never accomplish what I am speaking of.

If you would like to explore this avenue to rational prosperous relationship preservation, give us a call at 281-584-0519.

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4 Comments

In adversarial situations often the advice you get is to let the agreement be your instrument of negotiation or a weapon for battle.

Richard is right that these typical reactions are unimaginative and fail to see problems for what they are.

If the best advice you get is to send a nasty gram or legal letter citing the contract and it's a one-step solution process you're doomed.

It's posturing and chest pounding that very often signals to the other party that you are getting inadequate advice and you don't have a plan.

But, that is the negotiation tactics 99.9% of attorneys are taught. Write the demand letter and send it.

If you want the other party to dig their heels in and not want to listen to alternatives send the nasty gram.

Looking to franchise contacts to solve relationship problems is not your first best step.

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About this Entry

This page contains a single entry by Richard Solomon published on September 15, 2014 10:13 PM.

Do the Tim Horton's Franchisees Get a Franchise Association courtesy of Burger King? was the previous entry in this blog.

The Art of Solving Franchise Disputes is the next entry in this blog.

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