Executive management franchising teams in franchising companies must decide how they wish to handle disputes in the franchising agreement. More often than not clauses are put into the franchising agreements, which stipulate how disputes between franchise stores and franchisees will be handle.
Generally the parties agree in advance to handle such disputes in a certain way. One of the most common ways, which saves both the Franchisor and the franchisee from extensive legal fees is to use an arbitration clause.
Do I recommend arbitration clauses in franchising agreements? Actually I do and we always had them in our franchising agreements, ask your attorney. But mediation and litigation are also options to binding arbitration clauses. Please consider this in 2006.