BSM’s Success in Franchise Dispute

29 December 2022 in Business Law, Dispute Resolution Law

This article is based on an actual case conducted by the lawyers at Brander Smith McKnight and provides a brief example of some of the processes used in the successful negotiation and settlement of a dispute. Our client was extremely satisfied with the process, the degree of control the client maintained during the franchise dispute and of course the settlement sum.

The business lawyers at Brander Smith McKnight successfully advocated for and achieved a very favourable settlement for a client in a complex franchise dispute through the skilful use of dispute resolution tactics. Our lawyers developed a detailed negotiating strategy. However, the Franchisor failed to respond or provide suitable responses.  Our lawyers recommended the commencement of legal proceedings, due to the strength of the case, while continuing negotiations.

Our client, a Franchisee, made a debt claim against the Franchisor for its failure to pay for the Franchisee’s services under the Franchise Agreement between the two parties. After carefully examining the contract, our lawyers ascertained each party’s rights and obligations and made a thorough assessment of the legal aspects of the case including all strengths and weaknesses.

Our lawyers developed a legal strategy to manage any litigation and continue to negotiate. Our lawyers draft a Statement of Claim to set out the causes of legal action and the key facts.  The Statement of Claim is filed in court and served on the defendant to commence the legal proceedings.

Upon receipt of the defendant’s defence, our lawyers analysed the defendant’s position to ascertain any strengths and weaknesses and adjust our strategy accordingly.

We obtained all critical and necessary evidence including, email communication and other critical documents, such as invoices and financial records connected with the performance of the Franchise Agreement, and included them in our client’s Affidavit as crucial evidence of our client’s claim. Our client’s claim was for the liquidated amount of $44,000.00, plus interest of approximately $1,500.00 pre-judgment and costs.

During the course of the legal proceedings, the defendant failed to comply with various online court orders.  As a result, our lawyers were able to make various applications to the court and were awarded cost orders against the defendant. The cost orders amounted to a sum in excess of $7,000.00 prior to the commencement of any hearing.

The final hearing took place in the District Court. The other party’s legal team continued to fail to comply with the court-ordered timetable for evidence and filed the defendant’s evidence late and only two days prior to the date of the hearing. On the date of the hearing, the defendant’s legal team applied for an adjournment and informed the court that the defendant’s case was not ready to proceed at that time.

The Judge asked the parties to step outside the court and attempt to settle the dispute while the Judge considered the defendant’s application for an adjournment. Our client felt confident in BSM’s ability to negotiate a settlement outside of court, knowing that a negotiated settlement, even at this late stage would allow our client to exercise some control over the outcome, avoid the risk of a court hearing and would save some legal fees.

Our lawyers clearly explained the negotiation process to our client, who then authorised us to present an offer that the other party pay our client’s entire claim amount and the costs agreed upon by the parties or assessed by the court.

The other party offered $20,000 which was far below what our client expected, so BSM put forward a counteroffer of $75,000 inclusive of costs. Our team continued negotiations, and the other party offered a maximum offer of $55,000. Our team advised our client of the benefits of avoiding additional court-related expenses, hearing time and the frequently unpredictable assessment of damages by the court. On the basis of this recommendation, our client gave us instructions to propose a final settlement of $60,000.

As our client was eager to put the matter behind him and avoid any future claims, our team assured our client that if the other party accepted the offer, we would enter a Deed of Settlement and Release that would protect our client from any future claims and involvement in court processes. This was considered a major benefit to our client, given the matter was a long and draining process due to the other party’s various delays and non-compliance with dates set by the court. Ultimately, the other party accepted this offer.

Our client was very pleased with the result, relieved the matter was over and that excess time in court was saved due to the settlement process. At all times our lawyers made clear to our client the process and likely implications associated with each offer, and our client was thankful for our expert advice, negotiation and representation that successfully produced this excellent settlement.