Franchising, by definition, requires a bilateral contractual relationship between franchisor and franchisee. The relationship, however, between the parties is more than contractual. In the best of franchise systems, franchisor and franchisee share much more than a contract. They have a long-term commitment to one another and the brand to which they each contribute sweat, blood and tears—what is called the “franchise relationship.”
I recently read an article by one of my former partners, Craig R. Tractenberg, in The Legal Intelligencer (an ALM affiliate of the Daily Report) about a case in which a complaint by a group of franchisees against their franchisor was dismissed for failure to seek mediation prior to suit as required by their franchise agreement. That failure spawned a 23-page federal court docket filled with motions to dismiss, amended complaints, and after 7 months of filings and counter-filings, an order dismissing the case and outlining the plethora of unavailing excuses offered by franchisees for their failure to mediate. Waldron et al v. SVHB Marketing LLC et al., E.D. Pa., CA No. 23-cv-3485.