The other night I was flipping through channels and stumbled upon a repeat of the popular FX series “Sons of Anarchy” which is based on a fictitious motorcycle gang. I immediately thought of my run in with a similar bunch. I was in-house counsel with an international automotive aftermarket franchise system in the late 90’s. We had franchisees of varying backgrounds, including members of a well known, and feared, motorcycle gang (or club, depending upon your point of view). Needless to say, when our motorcycle gang member franchisee got behind on his royalty payments, we tended to approach the matter differently than our run-of-the-mill franchisee. Rather than a letter from yours truly demanding immediate payment, our head of collections usually made an in person visit. Fortunately, our head of collections was a 6’4” former US Marine Gunnery Sergeant who wasn’t intimidated by anyone, including franchisees who happened to be gang members . . . so they typically had a nice chat and we worked it out.
So what’s the point? Franchise lawyers preach uniformity. Deviation from system standards is never a good thing. In fact, treating franchisees differently in some jurisdictions may lead to potential claims and defenses in the case of termination or non-renewal of the franchise agreement. It is unfortunate that too many lawyers view every term and condition of the franchise agreement as black and white. Too many fail to look for a business solution and want to jump right into litigation mode. The practical truth is that franchisors must be nimble and not rigid in their approach to certain issues within their system. Are there going to be hard and fast rules to address material defaults or situations that are potentially damaging to the brand? Of course. But underlying every franchise agreement is a relationship between people who have a common goal, to succeed in business. If the franchisor loses sight of that, the game is lost . . . unless you can call in the Marines.