Franchise Lawyer Blog

Litigation or Arbitration

This brief blog entry comes in the form of a question.

First, some background: Our firm has drafted many franchise agreements. For quite a while each agreement included an arbitration clause similar in intention to the type of clause invariably seen in franchise agreements nationwide. My partner, Michael Einbinder, is a litigator with extensive experience in the franchising field. He has, over time, become of the opinion that arbitration does not offer the advantages for which it is praised: it is not necessarily cheaper or more expeditious. Moreover, the fact that arbitration findings are unappealable has proven to be, on occasion, a major drawback. We have accordingly begun to draft franchise agreements that do not have an arbitration clause.

The question is: what do you think? In your experience, is arbitration a preferred method of dispute resolution, demonstrably better than litigation? Or have you, like us, begun to develop doubts in that area? Any thoughts would be welcome.

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