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Representing Franchisor and Franchisee Clients

August 27, 2012

It is sometimes expressed by members of the franchise community that a lawyer’s representation of both franchisor and franchisee clients may lead to that lawyer’s taking inconsistent positions in servicing their clients.

There are a number of compelling arguments why that may be the case, but I believe that a client can be as well-represented by a lawyer who has experience acting for both sides as a lawyer only acting for one.  As someone who represents both franchisors and franchisees with respect to their business (not litigation) needs, I do not believe that my ability to understand “fair franchising” has ever made a client feel uncomfortable about whose interests I am representing. 

Unlike insurance litigation which necessitates a division between plaintiff and defence counsel due to the inherent adversity between the parties, the franchisor and franchisee are not always in opposition to one another.  Disputes certainly arise, but the intention of franchising is to foster business relationships and work together towards a mutual goal.  I strongly believe that a lawyer’s ability to see a legal issue from both sides of the coin only helps in facilitating the achievement of that goal. 

If a franchisor wants to insert a provision into its franchise agreement which I believe to be onerous, or not in keeping with industry or legal standards, I feel that it benefits both parties to draw that to the franchisor’s attention – from a practical perspective, it assists them in creating a franchise system that is fair and may yield happier franchisees, and from a legal perspective, it assists them in avoiding later claims that they acted in bad faith.  The best way to gain that insight is to understand, first-hand, how those provisions, or others like them, have had negative effects on a franchisee and its business.

I also do not believe that choosing a side is as black-and-white as it may appear, specifically where the client is a master franchisee.  A master franchisee is a franchisee who has the right to sub-franchise within a territory, making them a hybrid franchisee-and-franchisor entity.  In the case of master franchisees, corporate and advocacy matters benefitting one side over the other is of specific application to them vis-à-vis their relationships with their master franchisor and sub-franchisees.  To the best of my knowledge, franchise lawyers do not turn away master franchisee work due to fear of a conflict.

Finally, it is my strong belief that the entire franchise community can benefit from court decisions, regardless of whether the franchisor or franchisee is victorious.  In a court system clogged with litigation files, the decisions which bring clarity to the interpretation of franchise legislation only serve to illuminate the boundaries of the franchisor-franchisee relationship and lead to the hopeful settlement of issues between parties before recourse to the court system is sought.  I do not believe that such legal advocacy equates to taking inconsistent positions.

Certainly, every client should ask about the franchise experience of the lawyer they wish to retain.  But a franchise lawyer’s representation of both franchisors and franchisees should not necessarily make one weary of whose best interests that lawyer has in mind.

Tags: Franchising