Franchise Agreement Dispute Resolution

Franchise Agreement Dispute Resolution: Understanding Your Options

When it comes to owning a franchise, there are many benefits to enjoy, including a proven business model, established brand recognition, and ongoing support from the franchisor. However, as with any business arrangement, disputes can arise between franchisees and franchisors. That`s why it`s important to understand the options for franchise agreement dispute resolution.

Mediation and Arbitration

Mediation and arbitration are two common methods of dispute resolution in franchise agreements. Mediation is a non-binding process where a neutral third party works with the parties involved to reach a mutually acceptable resolution. Arbitration, on the other hand, is a binding process where an arbitrator or panel of arbitrators hear evidence and make a decision that is final and enforceable.

Mediation and arbitration can be more cost-effective and efficient than going to court, but they do have their limitations. For example, the parties involved in the dispute may not agree on a mediator or arbitrator, and the decision reached may not be satisfactory to one or both parties.


If mediation or arbitration are not successful, litigation may be necessary. Litigation involves going to court, presenting evidence, and having a judge or jury make a decision. This option can be more time-consuming and expensive than mediation or arbitration, but it may be necessary if the parties cannot agree on a resolution.

There are several factors to consider when deciding whether to pursue litigation:

— The nature of the dispute

— The financial resources of each party

— The legal merits of the case

— The potential impact on the franchise system

Alternative Dispute Resolution clauses

Many franchise agreements include clauses that require parties to use alternative dispute resolution methods before pursuing litigation. These clauses may also require mediation or arbitration to be conducted in a specific location or by certain rules.

It`s important to carefully review your franchise agreement before signing to understand the specifics of any dispute resolution clauses. If you`re already a franchisee and are involved in a dispute with your franchisor, consult with an experienced franchise attorney to understand your options and protect your rights.


Unfortunately, disputes can arise between franchisees and franchisors, but there are options for resolving them. Mediation, arbitration, and litigation are all potential methods of dispute resolution, and alternative dispute resolution clauses may be included in franchise agreements to dictate the process. As a franchisee, it`s important to understand your options and seek legal advice when necessary to protect your interests.


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