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This can potentially prevent the problem from escalating and reaching litigation, if it's handled effectively. While many franchisee concerns can seem unfounded, it's important to listen to them to gauge whether or not they have merit. Sometimes an isolated complaint might have broader implications, or future implications, that you hadn't considered. "It's always important to keep the group interests — of both franchisors and franchisees — in mind," says Kaarid. "That makes it easier to go through complaints. You're never going to satisfy everyone, but at least they have a voice." "There are instances where franchisor staff engaged in internal e-mails and silly things were said about franchisees," he says. "These are admissible in court. Franchise systems are very porous and things are often leaked." At the end of the day the courts aren't asking franchisors to divulge everything to the franchisees, or solely act in the best interests of the franchisee without concern for themselves. But the courts are asking franchisors to be fair when making big decisions — and show consideration for the franchisees' well being. "The courts will be quite receptive to franchisors just as they will be protective of franchisees," says Lisus. "They will be equally protective of a franchisor that operates in a competitive environment and who makes every effort to responsibly communicate with the franchisees." IH Creating a paper trail Of course, when big changes are being rolled out, a formal communication plan has to be in place. While the business side of the franchise may want it rolled out immediately — to beat out the competition or alleviate market pressures — it's important to note that a few extra weeks of proper planning could save months in litigation. "Sometimes business and legal folks operate in silos. The most successful franchisor systems have an embedded lawyer in their business decisionmaking side," says Kaarid. "The lawyer is better informed as to the business' needs, and they can shape how things are going to move early on — so legal issues aren't raised down the road." A strong communication plan makes use of typical communication materials — such as informative memoranda, e-mails, and newsletters — but it also relies on two-sided communication. Advisory counsels (made up of independent franchisees), pilot projects, or annual conferences are just a few ways franchisors can communicate business changes and receive franchisee feedback simultaneously. "What the courts look for is transparency," says Lisus. "Are the franchisors giving franchisees enough information to understand the economics of the relationship? If a franchisor is going to impose financial changes, it has to explain how and why it's doing it." Lisus recommends paying particular attention to internal communication as well. When it really matters. Appeals Opinions and Risk Management Mergers & Acquisitions Claims against Professionals and Fiduciaries Directors' and Officers' Duties and Liabilities Class Actions Toronto: 416 867 3076 London: 519 672 4510 w w w. c a n a d i a n law y er m a g . c o m / i n h o u s E Lerners-1/2_IH_Aug_11.indd 1 www.lerners.ca February 2013 37 • 8/16/11 8:42:12 AM

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