Does Arbitration Make Sense for Franchisors? A Litigator’s Perspective

Kevin Adams

Kevin Adams is partner at Mulcahy LLP (mulcahyllp. com). His practice focuses on franchise and distribution litigation and counseling. Kevin is a certified specialist in franchise and distribution law by the State Bar of California, Board of Legal Specialization.

Let’s face it; arbitration is not always the quicker, cheaper forum for parties to resolve their differences. Although arbitration does have the potential to be more economical and efficient than court, in practice, these benefits can prove elusive when arbitrating franchise disputes. Still, franchise agreements very often contain ADR provisions that require arbitration of all disputes. Given this, why do franchisors and their attorneys treat arbitration provisions as a one-size-fits- all addition to franchise agreements?

This article examines the current state of arbitration from a litigator’s perspective, the flaws with some historically touted benefits of arbitration, and the real, present-day benefits of arbitration to franchisors with footprints that extend into California.