Pressure Grows to Rethink the Use Of Mandatory-Arbitration Clauses

What is the best way for franchisers and franchisees to settle their disputes?

One complaint from franchisees: Because arbitration typically occurs in the home state of the franchiser, the individual involved must travel to that venue and secure temporary housing and legal counsel, and bear those expenses.

Even Congress has gotten into the fray. Last fall, Sen. Russ Feingold from Wisconsin and Rep. Hank Johnson of Georgia, both Democrats, introduced what they called the Arbitration Fairness Act of 2007. Part of their concern, says Sen. Feingold, is "that mandatory arbitration clauses are slowly eroding the legal protections that should be available to all Americans." Their bill would apply not only to franchising but also to consumers and employees.

The proposed legislation, which is being reviewed by the Senate Judiciary Committee, wouldn't prohibit arbitrating a dispute, but it would prevent one party with greater bargaining power -- typically the franchiser -- from contractually forcing individuals into arbitration.

Read full details at the Wall Street Journal