In addressing the issue of whether an arbitration clause made sense for a franchisor client, for years I have waffled on how to advise that client. In informal discussions with my colleagues, I have discovered that I am not alone on this problem.
I recall several years ago managing a piece published in the Franchise Law Journal where four prominent franchise attorneys were asked to pontificate on the issue — two represented primarily franchisors, and two represented franchisees. Intentionally, we chose from each camp advocates who had differing views on the issue. I have since observed that this group was more representative of the split within the franchise lawyer community on this issue than I would have predicted at that time. My anecdotal experiences over the last two decades confirm this sharp split. The truth is that this question is not simple to answer. There are many factors that come into consideration, including the size and strength of the franchisor as compared with its franchisees; the complexity of the issues that are likely to arise in disputes; the projected costs of judicial litigation as compared with arbitration; whether prompt adjudication is important; and the number of disputes anticipated — to name only some of the more key considerations.
