| Licensing, Technology Transfers, |
Year after year, company after company, I see people whose businesses are going through financial performance agony compared to earlier and better times, and who blame the difficulty on their franchisor. They start by complaining, often in a very aggressive manner, accusing the franchisor of bad faith (whatever that may be), failing to support the franchise system that they are paying for (whatever support is supposed to mean), and escalating the opprobrium to where everyone is at sword point.
After the relationship well has been poisoned by franchisee ill advised/unadvised action and by franchisor ill advised/unadvised responsive action/inaction, and effective communication is simply no longer available between the competing interested parties, the franchisee starts looking for a lawyer, a lawyer who will agree that the franchisee is right -- that the franchisor is wrong -- and that, by God's holy trousers, something ought to be done about this.
In the main, resort is had to two of the three kinds of lawyers that are available. There are theoretical lawyers who know or can look up the law, but have precious little real business insight. They wander around in the fog, not knowing what to do because they have never been in this kind of case before -- and of course the client franchisees never seem to ask how many such cases the lawyer has handled and what the outcome was. An apt simile would be to send an electrician to do neurosurgery. They spend so much time talking and thinking and never getting to the right solution that nothing is accomplished. Then there are the litigators who also have not been asked how many cases like this they have handled and what the outcomes were in those cases. To these uninitiated folks, it is clear that if the franchisor has done something perceived by the franchisees as disloyal or inept, and the franchisees are suffering, a lawsuit is the right thing to do. These folks bring on a lawsuit that is doomed from the outset.
What the franchisee(s) needed BEFORE the franchisor was called every awful thing in the English language, and BEFORE the business approaches its death throes, is that third kind of lawyer, who has been through this situation representing franchisees and/or franchisors, and who can present competent analysis and options, reasonable budget requirements estimates associated with each option and probable results from each option that are potentially attainable and not just pie in the sky nonsense. When interviewing a lawyer for assistance in resolving a legal problem, ASK THE TOUGH QUESTIONS -- HAVE YOU EVER HANDLED THIS PROBLEM BEFORE?
DID YOU REPRESENT FRANCHISEES OR FRANCHISORS WHEN YOU HANDLED THIS PROBLEM BEFORE? WHAT RESULTS WERE ACHIEVED IN THOSE INSTANCES IN WHICH YOU DEALT WITH THIS SITUATION BEFORE? CAN YOU GIVE ME/US ANALYSIS AND OPTIONS AND LIKELY CONSEQUENCES FOR EACH OPTION, ALONG WITH A REASONABLE ESTIMATION OF THE COST OF EACH OPTION AND THE TIME IT WILL TAKE TO GET TO THE END OF IT ALL?
Most lawyers will decline to provide an affirmative response to all these questions. That is because they don't understand the problem and fear your later claiming that they PROMISED you a specific result. Nothing could be more absurd. If you can't provide competent analysis of the problems, a range of options to deal with them, an estimate of the cost and time that each option will be likely to consume, and some ideas about likely outcomes -- not a promise or a guaranty of results -- then you simply are not qualified to represent these people and they should move on.
The lawyer who knows what this is all about will not be afraid to tell you, if that is the case, that your view of the situation is incorrect in some or many respects. If he can't explain why that is so to a point at which you understand that you may have been misapprehending the rights and obligations of the situation, then either he isn't capable of effective communication or you, the client, can't handle reality. In either instance, if at the end of the analysis stage there is no common view of the situation, further attorney-client activity with that lawyer should not occur. You should simply move on. But you should not put yourself out on the limb of taking antagonistic positions until you have acquired a competent understanding of the obligations of the parties.
Simply put, it is not enough that someone with whom you are a signatory to some contract, such as a franchise or other ongoing business relationship agreement, has done something or failed to do something and you are suffering. You may be experiencing injury and incurring real damages, but if the injury and damages do not flow directly from the other party's having violated a duty owed to you, your injury and damages do not give rise to a claim against that other party.
'It's not fair' is not a valid claim. Much of life is not fair. 'It's disloyal/a conflict of interest' is usually not a valid claim. Most contracts do not provide that the other party, even if that party is a franchisor, is obligated to forego opportunities elsewhere that may not optimize your situation. Usually the franchise agreement will specifically state that. Sometimes it is silent. People who don't understand the situation think that contract terms that are not there will simply be implied by some court under a supposed rule of 'Good faith and fair dealing'. That is almost never the case! Lawyers who tell you things like 'We could argue that...' usually don't understand what they are dealing with. In truth you simply cannot successfully argue anything that you have not, as a matter of evidence received into the trial record, established that you are entitled to. Where sympathy verdicts are received, they are customarily reversed on appeal. The only answer to 'We could argue that...' is 'What evidence that you have seen makes that an available argument?'
Sometimes business circumstances change for the worse and there is simply nothing that can be done about it. Asserting claims that you don't have rarely produces anything but a nuisance level result, and usually doesn't even produce that. Contracts written to cover long periods of years almost never have the capability of providing solutions to problems that arise because technology, markets and competitive levels change. The answer may not always lie in confrontation in court. You may not be right. There may be blame enough for everyone. How one is to deal with serious business disruption should never be entrusted to any advisor who cannot provide answers to the questions that you simply must ask.
Copyright 1997 - 2008 || Richard A. Solomon
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 | Licensing, Technology Transfers, |