Have No Fear

Solving Problems

Let's face it: Franchising tends to generate disputes. The interests of the franchisor and its franchisees are at odds in a number of ways. One measure of excellence in franchising is how effectively the franchisor avoids the courtroom when it wants to enforce the terms of its franchise agreements.

The contract may contain a provision that requires parties to submit all disputes to arbitration before any lawsuit can be filed. That could mean some travel in your future: Many franchise agreements require arbitration to occur at the American Arbitration Association office closest to the franchisor's headquarters.

The franchise agreement may also specify where a lawsuit must be filed if either party makes a legal claim. Your attorney will probably resist accepting language that requires legal actions to be filed in the home jurisdiction of the franchisor.

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This article was originally published in the December 1998 print edition of Entrepreneur with the headline: Have No Fear.

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