Navarrete Perinot P.C. Offers Franchise Pre-Litigation Mediation Services

THE IMPORTANCE OF GOOD FAITH

The implementation of the Arthur Wishart Act (Franchise Disclosure) has resulted in a dramatic increase in litigation between franchisors and franchisees.  This increase in litigation has been caused by the disclosure requirements imposed on franchisors and the good faith obligations imposed on both parties.

The good faith obligation is critical to the operation of the franchise system and the individual franchise store or operation.  The obligation to deal with each other in good faith and in a commercially reasonable manner is not optional, it is an obligation imposed on both parties by the Act.  The greatest sign of good faith dealing is to try and resolve a dispute before it reaches the litigation stage.

With the cost of litigation running in the hundreds of thousands of dollars, it no longer makes sense for franchisors and franchisees to jump into litigation without giving mediation a chance to salvage the business relationship.

We are a team of litigation lawyers that have litigated against some of the largest franchise systems in Canada.  We understand that to a franchisor the preservation of the brand, consistency across the franchise system and stability, are critical to the operation of the entire franchise system.   We also understand that to a franchisee there is a need to have some type of a return on the initial investment and some sense of control over the day-to-day operation of their business.

THE HIGH COST OF LITIGATION

What our wealth of experience has taught us is the following:

  1. Litigation results in both the franchisor and franchisee spending hundreds of thousands of dollars in litigation, with very little results to show for that tremendous expense;
  2. Litigation inevitably leads to an end of the franchisor/franchisee relationship and a loss of time and investment for both the franchisor and franchisee.
  3. Disputes could have been resolved early on with the help of a neutral mediator experienced in franchise litigation and law, at a fraction of the cost of litigation.
  4. The litigation impacts the reputation of the franchisor, due to the obligation to disclose the litigation in the franchise disclosure document.
  5. The litigation can financially cripple the cash flow of the franchisee.

In the midst of a dispute, the natural reaction of the parties is to take hard positions against each other.  The franchisor will point to its rights under the franchise agreement and feel that it is in the right.  Similarly, the franchisee will point to its large investment in the franchise and fell that it is in the right.

As a result, the parties are unable to view beyond the dispute and they ignore the larger relationship and the time and money that invested by both parties.   The natural tendency is to ignore the interests of the other party and to focus on your own self-interest.

With the help of our team we will assist you in ensuring that your interests are heard by the other side so that you can get past your respective positions and move towards a creative, long term solution to the franchisor/franchisee relationship.

HOW OUR SERVICES WORK

We will ask both parties to enter into without prejudice discussions to attempt to resolve the dispute.  What this means is that both parties will not be able to use the documents submitted or the conversations held during the mediation against the other side.  All communications will be treated as confidential.

We will require the parties to submit a short three-page outline of the problems that are being experienced, along with any evidence the parties have in their possession.  We will then meet with the parties in a neutral location and hold a half-day mediation to attempt to resolve the dispute and restore the franchisor-franchisee relationship.

In order to avoid a positional mediation we would encourage the parties to attend without lawyers, although the parties are always free to contact their lawyer during the mediation to obtain legal advice.

Our services start at $2,500.00 plus HST, for a half-day mediation.

For further information contact Xavier Navarrete at xnavarrete@nplaw.ca or at 647.259.1771.


Mayor Rob Ford Relieved as Mayor of Toronto in Conflict of Interest Case

On Monday November 26, 2012, Mr. Justice Charles T. Hackland of the Ontario Superior Court of Justice, in declaring Toronto Mayor Rob Fordӳ seat vacant, ruled that Toronto Mayor Rob Ford violated the Municipal Conflict of Interest Act when he both spoke and participated in a council vote regarding a matter in which he allegedly had a pecuniary interest ie. violated Toronto City Council’s code of conduct by soliciting donations to his football charity using city materials. The enforcement of the operation of Justice Hacklandӳ decision is suspended for 14 days giving time to the City of Toronto to make administrative changes as a result of his decision.

For a copy of the decision please see below:

Rob Ford Decision