Many franchise agreements embrace operational rights inside an unique territory. However what occurs if there’s territory overlap, or one franchisee encroaches on the territory of one other? Whether or not you’re a franchisee or a franchisor, there are methods to cope with territory border disputes.
Coping with disputes successfully is essential no matter your job. For franchisees, sustaining a great working relationship permits insights to proceed to be shared. For the franchisor, discovering options that appease each events is essential to the wholesome upkeep of the franchisor-franchisee relationship.
What’s a franchise territory border dispute?
Typically, your territory of operations can be agreed upfront and acknowledged throughout the franchise settlement. If there’s any confusion, debate, or emotions of inequality – a franchisee may really feel their territory has much less alternative, as an illustration, than the following territory over – a franchise territory border dispute may happen.
One franchisee may encroach upon the territory of one other by finishing companies for people and organisations throughout the territory (not all the time unlawful). Alternatively, a franchisor is perhaps the one to encroach upon a territory, by agreeing to the opening of a brand new franchise streets away or starting to promote the identical merchandise because the franchisee in one other close by location, like a grocery store. As a franchisee, you should definitely take note of the phrases of your settlement and search for the phrase “unique”.
Franchisor suggestions for dealing with franchise territory disputes
- Be trustworthy from the beginning
Honesty is all the time the most effective coverage and being clear from the off will can help you start the method of constructing a robust franchisor-franchisee relationship. When assembly with a possible franchisee, be clear about what they’ll obtain in return for an preliminary funding. Categorical whether or not or not they’ll profit from an unique operational territory, and in the event that they received’t, contemplate explaining why. Additionally be sure that they’re conscious, in the event that they’ll be working in an unique territory, that it isn’t towards competitors legislation for franchisees to answer enquiries exterior of their very own territory – they’re simply not capable of actively promote exterior of it.
- Ensure you have a well-drafted franchise settlement
A franchise agreement is a legally binding doc that each franchisor and franchisee conform to and signal. If an unique territory is part of your settlement, you’ll want to incorporate this within the doc, together with any stipulations, exceptions or additions. If disputes happen and authorized involvement is required, a strong franchise agreement backing you up will make the method far much less hectic. View the franchise settlement as your bible, and if it’s been written accurately, it ought to all the time have the solutions you want (and the solutions that your franchisee wants, too).
- Test in often
In case you talk effectively, your franchisee will really feel that they will discuss overtly with you when points happen. It will typically stop disputes from rising to an unmanageable stage, whether or not between your self and your franchisee, or between two of your franchisees.
Issues might be settled and handled instantly. The higher your working relationship, and the extra that you simply test in, the extra possible you’re to have the ability to handle any considerations simply, merely and shortly.
Franchisee suggestions for coping with territory border disputes
- Know your personal rights earlier than you attain out to your franchisor
Whether or not you’re arguing with a fellow franchisee about doable territory encroachment or feeling that your franchisor is encroaching, you’ll must go over the phrases of your settlement and make sure you’re right about your personal entitlements. The franchise settlement ought to aid you to search out clarification. Keep in mind – what isn’t stated is perhaps simply as necessary as what’s, and that responding to queries in one other territory isn’t towards competitors legislation.
- Talk together with your franchisor
In case you nonetheless really feel you’ve a dispute when you’ve checked the phrases of your franchise settlement, your subsequent port of name ought to all the time be your franchisor. Whether or not you’re asking them to mediate a dispute between your self and one other franchisee or coming to them with considerations about their very own actions, be trustworthy and respectful, and see if the difficulty might be resolved by a frank dialog.
- Search authorized recommendation
In case you can’t resolve the franchise territory border dispute by dialog together with your franchisor, and also you each preserve totally different positions and views, then it is perhaps time to seek legal advice and guidance. Has the franchisor failed to satisfy the calls for of the franchise settlement? In that case, they might be in breach of contract. Regardless of the state of affairs, a lawyer will aid you to determine it out and search the very best final result.
- Mediation earlier than arbitration
On the arbitration stage, an impartial third-party arbitrator will overview the dispute and make a legally binding and enforceable resolution. However in case you can agree on a decision earlier than this stage, throughout mediation, you want by no means attain it. Mediation is a friendlier strategy. It’s primarily a structured negotiation course of accomplished within the presence of a mediator and attorneys. The mediator doesn’t present a ultimate resolution, however as a substitute makes an attempt that can assist you and your franchisor come to at least one.