Multi-Unit Franchisee Magazine Issue II, 2015 | Page 81

A QUESTION OF BALANCE
attorneys advise their franchisor clients to
settle disputes through binding arbitration.
He doesn’t like that.
“Binding arbitration is probably the worst
thing any franchisor can agree to. What
I’ve done as a franchisor was change all my
franchise agreements to allow us to settle
disputes first and foremost by nonbinding
mediation, and then if we couldn’t settle
we’d go to pure litigation—with rules.”
Fiorentino says the reason he likes nonbinding mediation is simple: it gets both
parties to the table. “I always felt that as
a franchisor, the last thing I wanted to do
was win a lawsuit; the first thing I wanted
to do was fix a problem.” He says you don’t
really know about a problem in the system
until you get to nonbinding mediation. “So
often, a CEO of a franchise brand may not
even be aware of a franchisee issue until it
gets to litigation and they have to sign a
paper from their lawyer who says, ‘We’ve
got a franchisee we’ve put it default and
we’re going to arbitration.’”
For him, that’s the last resort. Instead,
says this former franchisor, “I view franchisees as partners. If somebody invests
money into my brand and they open a
location and are a good operator and they

follow the system, if the location doesn’t
work, and no matter what we or they do
can get it to breakeven or profitability, it’s
time to close that location and move on,
or relocate it.”
Fi