Tayyib Parrish 
Franchising can be a wonderful model whereby you get to own and operate your own business, but there are also legal risks that should be managed with caution.
Dispute resolution provisions for dispute resolution can be found in most franchise agreements. Mediation or arbitration might be some of these mechanisms.
Defining Key Terms
Franchise agreements specify the terms of an ongoing relationship between a franchisor and franchisee, so that disputes are minimized and compliance is maintained. To avoid disputes and get the most value from such agreements, both sides need to understand all of its key terms.
What to Expect From a Franchise Agreement:
-Dispute Settlement- It is where any disagreement relating to an infringement or breach must be settled (Mediation and arbitration are very common forms of dispute resolution for the parties involved). Such processes also offer cooperative mechanisms that could work for everyone.
Intellectual Property Rights- This section states who has the obligation to protect intellectual property on the two sides. These rights must be fully grasped by franchisees and maintained so that their franchisor does not accuse them of infringement.
Termination Clause- This outlines the conditions and procedures under which a franchise agreement can be terminated, some of the most common reasons are not being able to meet payments, not adhering to operating procedures or misrepresenting data.
Defining Rights and Obligations
Intellectual property should be covered explicitly and thoroughly in franchise agreements. That should include provisions for the use of trademarks, logos, proprietary systems and data and guidelines for doing so. Not only that, most franchise agreements also contain confidentiality clauses and reporting procedures to notify the company of alleged breaches of those rights.
Franchisees will have to follow the business procedures and quality standards of the franchise system to maintain brand integrity and that may include creating written policies around training, operation directions, etc in the franchise contract.
Final clauses in a franchise contract must detail how either party can end the agreement at any time and specify notice requirements as well as terms that must be met in order to terminate; for example, financial or performance violations but also civil or criminal violations or activities that are unlawful. These contracts should also contain non-compete clauses to make sure that franchisees don’t operate similar business in a specific location when their agreement is terminated.
Defining Responsibilities
Franchisees will usually be asked to follow the brand guidelines, business rules, and other obligations stipulated in the contract by the franchisor to help keep the network quality and consistency. Failure to do so risks both sides fighting expensive litigation and compromising both partners’ commercial image and profits.
Franchise agreements often include limitations on how franchisees can use intellectual property, and ask them to keep confidential confidential information related to the franchisor’s business, to avoid being accused of infringement or breach. That prevents any infringement.
Contracts may also have termination provisions to govern early termination and any compensatory action against a breached agreement (reconciliation of fees, market adjustments, etc) and perhaps even the severe case of a health or safety breach bringing it to an early end. Parties need to understand these kinds of clauses if they want to make sense of the termination.
Defining Dispute Resolution
For franchisees and franchisors alike, keeping good relations and negotiating mutually beneficial resolutions of conflicts should be the number one priority. Good negotiating techniques might let the two sides get their way and avoid hefty lawsuits.
You will often find arbitration clauses in franchise agreements, that determine the process for dispute resolution. Arbitration is typically cheaper and more efficient than litigation; not only that, but it is also a chance to maintain confidentiality while keeping the sensitive company information away from the public eye.
When they do conflict, both sides need to communicate quickly and share complete, open data to find an agreement. If the franchisor and franchisee are at loggerheads over territorial claims, an equal dispute process could lead to an amicable settlement.
