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.
We Can Work it Out: Using Mediation to Avoid Litigation
Many franchisors include an arbitration clause in their franchise agreements to govern franchise dispute resolution. This requires both parties to take any disputes to arbitration instead of to court. Arbitration is a form of alternative franchise dispute resolution where a neutral third party, the arbitrator, has power to decide the case. An arbitrator's decision is final. The winning party can enforce the arbitrator's decision in court. Decisions regarding arbitration can be complicated and are best made with an experienced franchise attorney-but here are a few things to consider: