If you are considering buying a franchise, you need to beware of empty promises from the franchisor. Over the last few years, franchise agreements have become extremely one-sided. Recently, many franchisors are making no enforceable promises to provide franchisees with any support or assistance after their business opens.
When reviewing a business contract or franchise agreement for a client, we often read the dispute resolution section first. That section describes the process the parties will use to resolve disputes and what will happen if either party decides to file a lawsuit. Many agreements provide that any disputes will be resolved through binding arbitration, a private dispute resolution process where the parties hire an arbitrator to act as a private judge and resolve their dispute. Generally, the arbitrator can do every thing that a judge can do including deciding pre-trial issues, hearing evidence and deciding the case. An arbitrator can order the parties to pay damages, fines and legal fees. One of the major advantages of arbitration is that, generally, the parties may not appeal the arbitrator's decision, meaning for better or worse, the outcome is final.