As a franchise business owner, you naturally want to do what you can to avoid getting into disputes. But despite your best effort, this may still happen. What can you do if you get into an argument or disagreement with the franchisor?
Fortunately, litigation is not your only option. In fact, many alternative dispute resolution methods might work for you.
Arbitration is closer to litigation than mediation and is the preferred venue for franchisor-franchisee disputes. The process involves an arbitrator, whose role is similar to a judge. An arbitrator oversees a case, listening to all parties present their side. They then make a legally binding decision based on what they have heard. You and the other parties must abide by this decision.
Thus, arbitration works better for people who might struggle to come to a consensus on their own or with mediation. Oftentimes, arbitration is mandated to resolve disputes and written into the initial contract.
Mediation, on the other hand, works better for franchisors and franchisees who have less strenuous disputes. This is because a mediator often plays a supporting role. They cannot hand down binding decisions. They offer suggestions and resolutions based on what they hear. They may also step in to ensure all parties say their share. While they can give their opinions, it is up to you and the other parties to make the final call.
Each option suits different situations. The first step is to reach out to a qualified franchise law attorney to see what process will be most beneficial for you.