Underneath the Golden Boy - Robson Hall Faculty of Law

Response to Consultation Paper on Franchise Law 339
From a franchisee’s perspective, ADR offers a less expensive means of
dispute resolution than litigation, removing barriers associated to justice such as
cost, location and duration. 151 For instance, although the length of a mediation
varies with the complexity of the dispute, mediation of a typical franchise dispute
may take 10-15 hours and involve two or three sessions. 152 ADR will also allow a
franchisee to avoid the combative nature of litigation, fostering the preservation
of commercial relationships while parties attempt to resolve a dispute. 153
Furthermore, the franchise relationship presents some particular aspects which
make it critical that the courts have special tools to deal effectively with their
disputes. 154 Some of the concerns that franchisors and franchisees have to
address when a dispute arises between them include:
• It is very difficult for all parties to continue working together on a daily
basis while pursuing a court case between them;
• In many cases, a franchisee who decides to sue his franchisor is not, at
that time, in a good financial position;
• Where the amounts paid to franchisors by the franchisee are the only,
or main, source of income, franchisors have found themselves in
problematic positions toward their franchisees by reason of the slowness
of the court system; and
• Another problem encountered by franchisors and franchisees when
disputes arise is the uncertainty in regard of their contractual
relationship during the time when litigation has taken place, most
specifically in the event where the franchisor has terminated the
agreement by reason of one or several defaults committed by the
franchisee while the franchisee pleads that these defaults are nonexistent,
are not sufficient to justify the termination of the franchise
agreement or that the franchisor has improperly terminated same.
These examples demonstrate the need to provide for particular mechanisms
and means in order to deal with issues encountered in franchisors/franchisees
151
Ibid. at 261.
152
International Institute for Conflict Prevention and Resolution (CPR), “National Franchise
Mediation Program: A dispute Resolution Process for Franchising,” online:
at 4.
153
Daniel F. So, supra note 69 at 264.
154
Jean H. Gagnon, “Some Considerations Regarding the Judicial and Non-Judicial Resolution of
Franchisors/Franchisees Disputes,” (April 1, 2003), online: Jean H. Gagnon Consulting
Services
at 7.