In our last article in AI magazine (February edition) we talked about the impact of disputes in the franchising context and how to minimise the risk of claims being made against you. In this article, we focus on clauses to include in your franchise agreement to best protect both parties should a dispute arise. In particular, we consider arbitration as a method of dispute resolution which has seen a rise in popularity in relatively recent years.
It is never in an organisation’s business plan to become involved in a dispute and, particularly at the outset of a relationship, there tends to be a feeling of optimism about the business going forward. However, when entering into new contracts (either as franchisee or franchisor) it is important to consider how matters might unfold should you become embroiled in a dispute. This is particularly important in the context of international contracts involving parties from different jurisdictions with different legal systems and possibly cultures.
The majority of commercial contracts will include a ‘Dispute Resolution’ clause as a matter of course. It should set out how, who, where, which law and when a dispute will be managed. It is worth thinking carefully about each of these considerations before making a decision on each.
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For further information, please contact Nicola Broadhurst, Sarah Murray or Catherine Penny.