Smart Communication Tips for Franchisors and Franchisees
By, Beth Brody, Faegre & Benson LLP 
Franchisors need to embrace the principles of smart communication and train their entire organizations on smart communication. What is smart communication? It is the art of communicating with franchisees and others in a way that will decrease your risk of litigation and help you win a case in the event you are involved in litigation. Below are the six basic principles of smart communication:
- Communicate what you mean and mean what you communicate. While this sounds trite and self-evident, it is not. By communicating what you mean, you avoid playing games and creating ambiguities between the parties. You create a transparency that builds trust between the parties. If you communicate what you mean, you will not be threatening termination when you know that you are not willing to take that step. By following this simple rule, you can provide clarity and decrease the likelihood of misunderstandings and distrust.
- Know when to create a written communication. Avoid admissions and CYA memos. These will often come back to haunt you if you do end up in litigation. As a general rule, less is more so you should stick to the facts and avoid opinions. For example, envision a situation involving a franchisee who is failing. No one in the franchisor organization wants to take the blame so people in various departments begin to point fingers at one another. Perhaps the franchise development people say the problem was caused by a lack of operational support, while the operational people say the problem was due to lack of effective advertising and the marketing people say that the development people erred by selling the franchise to the individual in the first place because he was undercapitalized. While they are busy playing the blame game, they are also building a very good case for the franchisee to bring against the franchisor. All of these communications are discoverable in a lawsuit. When deciding what to put in writing, try to create an exhibit that will win the case, rather than one that could lose the case.
- Understand the significance of the words you communicate. There are certain words that have legal meanings or significance that are undesirable in the franchise context. For example, you should avoid referring to your franchisee as your “partner” or your “agent.” You also do not want to identify yourself or your relationship as “fiduciary.” In your franchise documents, you should always have the “right” to do something, rather than the “discretion” to do it.
- Never allow an inaccurate writing to be the last writing. Simply put, you do not want to make an admission by your silence. For example, if a prospective franchisee sends an email thanking you for the discussion on earnings information (and there was no such discussion), you will need to set the written record straight.
- Understand the limits of the Attorney-Client Privilege. The attorney-client privilege apply only to advice given on legal issues. Thus, just because you copy your attorney on an email that discusses marketing strategies, that communication is not necessarily protected under the privilege.
- Beware of e-mail communications. Special care needs to be exercised when communicating by email. Emails are often drafted casually and sometimes carelessly. It is too easy to simply hit the “Send” button without carefully considering the wording and tone of the communication. It is also too easy to send the email to the wrong person or hit the “Reply to All” button when you do not intend the email to go to everyone. Often there is a false sense of privacy and a false expectation of the ability to delete the writing or recall the email.
By following these six common sense rules, you will help minimize your litigation risks.
About the Author: Beth Brody is an attorney with Faegre and Benson LLP. She has represented franchisors for over 30 years and is a frequent speaker on franchise topics. Her email address is mbrody@faegre.com .