International Law

Interest Based Mediation and Managing Franchise Relations

I had the pleasure of conducting an interview with Nancy Connelly of MWI, a nationally recognized dispute resolution services and training firm specializing in resolving difficult business, commercial and organizational disputes. 

In particular, mediation as an alternative to a trial recently came in for a rough ride from one the American's top civil attorneys.  

As recounted on Diane Levine's blog mediation channel, Joe Jamail claimed:

"There are some lawyers who do nothing but this mediation bullshit.

Do you know what the root of mediation is?

Mediocrity!"

Modern based interest based mediation is anything but mediocre, and relies upon a skill set likely unfamiliar to Joe Jamail - who alleged stomped on a witness' foot in the witness box to elicit an unfavourable predjudicial remark.  Nice theater, but not much in the way of problem solving, which is necessary to manage the franchise relationship.

For some real understanding of interest base negotiation and mediation and its role in managing relationships, I turned to Nancy Connelly and MWI.

MWI has an impressive client list including, GM, BMW North America and Coca-Cola.

Michael: Nancy, can you give us some background on your history and involvment with arbitration and arbitration?

Nancy: Since 1996, I've worked in the mediation and arbitration of franchise disputes for companies who have a nation-wide, systemic approach to conflict management.  

Baring fraud or felony, these alternate dispute resolution systems allow and encourage mediation for almost anything that is an outgrowth of the contract between them. I've also been involved in system design and review, training, process and case evaluations and I manage 80 - 90 cases yearly.

Michael: In your view, what are the benefits of mediation as a dispute resolution process for franchise systems?

Nancy: Franchise systems benefit from mediation to resolve conflict in many respects.  Not only is mediation faster and less expensive, it is also the only venue in which the parties, and not the attorneys, control the outcome. 

Outside mediation, the parties give control over the outcome to someone else, an arbitrator or a judge. Making mediation mandatory as a first step should not have the negative rep is seems to have in some quarters.

What is mandatory is that the parties come in good faith to settle: what is not mandatory is that they settle.  

They have given up none of their rights to proceed in any other venue. In using the courts or arbitration as the first step, however, the parties immediately give up control.

Michael: That is very interesting. Can you speak a little bit more about "giving up control"?

Nancy: In litigation, decision-making is placed with a judge; in arbitration, decision-making is placed with the arbitrator.

One advantage to arbitration is that the parties select the arbitrator. Often, each party selects a party advocate arbitrator who, in turn, select a third neutral arbitrator, which is expensive and time-consuming.

In mediation, you, the party, have to do the work of persuading the other side, not a judge nor an arbitrator, that your perspective and supporting data is worth consideration by them, and that you are taking into account their interests. No one will get 100% , but no one will lose.

For an on-going business relationship, this distinction between litigaiton/arbitration and mediation is very important to reaching a successful outcome, one both sides can live with.

Often, the parties draft the settlement agreement in their own handwriting. If the terms are not being met, the other side can send the offending party a copy of the agreement.

A settlement agreement in mediation is enforceable. In addition, parties control the process by asking for a 'time out' if they feel pressure, perceive bias or sense that they are not being listened to, they can call for a 'time out' and address those issues.

One cannot use one's initiative in that manner in court franchise dispute resolution.

Michael: What are the features of the best conflict resolution system you have worked with?

Nancy: The best franchise conflict resolution system I've worked with in over twelve years is one with collaborative review of both the resolution process design and the process for the selection of the mediators.

Once that is done, the message has to go over recognized signatures that mediation is being offered, not only as an option to court, but also as a benefit to being in that system.

If the parties agree to use mediation, however, they have to come in good faith to settle and with appropriate decision-makers.

To avoid the natural tendency to fear retribution in something new like this, the parties also have to understand and accept that the strict confidentiality that accompanies mediation is there to protect the candor that parties are expected to bring to mediation.  

As a result of confidentiality , no one nor offers made can proceed to any other venue. In short, mediation is not a cheap form of discovery.

Michael: Tell me a little bit more about the MWI approach.

Nancy: Here at Mediation Works Inc.(MWI), the panel of national franchise mediators consists of mediators with broad experience in contractual conflicts, a focus on franchising and significant mediation experience - many with 1000-3000 cases mediated. 

Even with those qualifications, panelists go through an internal review at MWI and must participate in updates to remain current with the changing landscape. 

In addition, a large number teach at prominent law schools but none is associated with any franchise system or industry association.

The steps taken to assure and reinforce total transparency in the alternate dispute resolution process contribute to an amazing success rate.  

A franchisee recently wrote that the fairness of the mediation process and the mediator restored his passion for the work he loves to do.

Full post as published by Misleading Advertising Law on March 08, 2009 (boomark / email).