Published By Franchise News
June 16, 2025
Franchisors Lack Alternative Dispute Resolution Knowledge
I have been involved in the franchise industry for more than fifty years: 40 years as a franchise lawyer, 15 years as a franchise dispute mediator and arbitrator, as well as a franchise business operations consultant, expert witness, and member of franchisor advisory boards. What has surprised me most during these years is how little most franchisors and their advisors know about alternative dispute resolution.
The numbers are clearly against franchisors: with often hundreds of franchisees, and only one franchisor, there is a strong possibility of a dispute at some time with a franchisee or a group of franchisees. Yet franchisors and their advisors are often not prepared on how to deal with a dispute at an early stage and possibly before litigation. Even worse, their agreements do not deal with the possibility of a dispute and include provisions on how these disputes will be handled.
There are many ways in which a franchisor can require the parties to meet, to use an ombudsperson, to have a dedicated member of senior management to consider franchisee concerns, or to require mediation and/or arbitration. With mediation and arbitration, the dispute procedure can be set before the dispute arises and many of the procedural and legal requirements, including how the hearing will proceed, can be established. Most importantly, the parties can agree on what experience in franchising the mediator or arbitrator must have, and what limitations there may be for an appeal from an arbitration award.
I write and speak at and for many programs to educate franchisors and their advisors to become aware of alternative dispute resolution and to ensure that their agreements are well drafted and detailed to outline various steps and procedures to attempt to resolve disputes early, efficiently, and with a minimum of disruption.
Frank Zaid
Franchise mediator, arbitrator, business operations consultant, expert witness, ADR Chambers
