The Pros & Cons: Mediation vs. Litigation

By Steven Belmonte CEO, Vimana Franchise Systems LLC | April 01, 2012

If you feel limited as to your options in negotiations with franchise companies, there's new hope. Third-party mediation and negotiation services are available to licensees to help them avoid costly litigation. Hospitality experts who once walked-the-walk and talked-the-talk of a franchisor can use their experience to help licensees negotiate out of those agreements. Steve Belmonte explains the pros and cons of mediation and litigation, and why mediation is most likely the best solution for your franchise needs. Not only is it better cost-wise, but there is a high percentage rate of success for both parties.

There is a sizeable new wave of advocacy for mediation that is beginning to build within our industry. The reason is because mediation is probably the closest thing to a "no-brainer" alternative to litigation in many years.

Why? Because litigation is very expensive, arduous and time consuming, and it puts a lot of stress on all parties involved. Likewise, litigation doesn't focus on settlement or resolution. It focuses on deciding which side is right or wrong. Therefore, any settlement is a byproduct of litigation.

Mediation, on the other hand, is inexpensive, and disputes are oftentimes resolved in one or two days, not one or two years, with a high percentage rate of success for both parties. Let me expand on that.

All too often, franchise contract disputes cannot be resolved in meetings between the two parties, and then one or both make the decision to hire legal counsel in order to get the matter straightened out. Suddenly, what was a two-entity partnership now becomes four entities as legal teams from each side set their sites on resolving the case for the betterment of their respective client, but also improving the bottom lines financially of their respective law firms. So what's the alternative? The answer is mediation.

Mediation is an informal, non-binding negotiation process through which an impartial third party tries to get the disputing parties to reach a settlement. The mediator's role is to isolate disputed issues, develop options or consider alternate solutions, and encourage the parties to reach a settlement accommodating the needs of the parties. The mediator isn't a judge and has no authority to impose settlement terms. The mediator's role and the goal of the process are to help the parties achieve their own resolution. There are two very important advantages to mediation. First, there is a considerable cost savings. Legal fees and other litigation expenses are not showing any signs of diminishing. Second, there is a considerable saving of time. While I am not advocating that attorneys are not needed, the red tape associated with litigation could potentially extend over the course of six months to a year, if not longer with attorney's fees topping out at $25,000 to $40,000. Depending on the mediator, a dispute could potentially be resolved in one to two days and cost a small fraction of what you would pay an attorney.

Choose a Social Network!

The social network you are looking for is not available.

Close

Hotel Newswire Headlines Feed  

Brian Mitchell
Bonnie Knutson
Nancy Brown
Andrew Freeman
Robert O'Halloran
Didi Lutz
Bonnie Knutson
Michael Koethner
Amy Locke
Lorraine Abelow
Coming up in June 2019...

Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.