Legal dispute proceedings are costly and unpredictable. Many times, they become elevated and difficult to disarm due to a lack of knowledge or because neither party is willing to compromise. It is particularly important to have an independent mediating party that can provide clear and impartial conclusions to resolve disputes between retailer and landlord or between a franchisor and franchisee.
Franchise agreements clearly delineate the legal boundaries of the “sandbox” within a “shared” market and give franchisees protection over areas from competing franchisees of neighbouring territories. They also identify expansion opportunities within a market and dictate pace of growth between new and existing franchisees. When a franchisor deems there is potential growth in a small market, a market expansion study is completed to justify this new proven growth opportunity. But what if you are the franchisee with the store in that same small market, and do not agree with the franchisors’ proposed plan? What remedies or recourse do you have?
A thorough peer review of the market study prepared and reported by the franchisor is a necessity. The study must be examined for inaccurate data methodologies and computational errors that would discredit the validity of the report. As the franchisee the onus is on you to show that you will suffer a loss of revenue. Therefore, a well-documented fact-based report is essential as evidence for an appropriate and plausible alternate conclusion. With these supporting documents the franchisee can confidently proceed with a statement of claim or mitigation hearing to establish potential liquated damages in the event the franchisor proceeded with the proposed new store in a small market that is not suitable for expansion.
decisionSMART offers the knowledge to help you navigate through the legal ramifications of certain decisions and the tools necessary to prepare quality reports that detail and confirms the impact on your financial profitability. We have worked with many tenant, landlord and retailer groups over the years to resolve similar disputes as mentioned, terminations, renewals, and defaults in a fair and equitable manner, helping both parties resolve their conflict with great compromise and rewarding outcomes.
