An End to Mandatory Arbitration Clauses?

In the recent past, I have written about the shortcomings of arbitration as a dispute-resolving format for hotel franchise agreements. (see Hotel Online, “Nobody Asked Me, But… No. 27”).  In my estimate, mandatory binding arbitration protects franchisor interests while diluting franchisee remedies.

A recent issue of the Wall Street Journal reported that the Arbitration Fairness Act of 2007, is being reviewed by the Senate Judiciary Committee.  The proposed legislation doesn’t prohibit arbitrating a dispute, but it would prevent one party with greater bargaining power, typically the franchisor, from contractually forcing individuals into arbitration.

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Stanley Turkel, MHS, ISHC, is a New York-based hotel consultant specializing in hotel franchising issues, asset management and litigation support services. He is also available for due diligence studies for an acquisition, a third-party audit of a marketing or operational problem, an expert review of a management contract or a franchise agreement, or litigation support. Mr. Turkel is a member of the International Society of Hospitality Consultants and can be reached at 917-628-8549 or email at [email protected]

 

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Comments

Mandatory Arbitration

Stan, I have enjoyed your reporting on the AAHOA's quest for fair franchising contracts and their reports on various franchisors.

In my view, neither litigation nor arbitration is the correct process for disputes that do not call the franchise relationship into question.

We need to have a franchise specific mediation program that kicks in before disputes become legal ones: there is nothing wrong with a legal dispute, but not all business disagreements ought to be solved by simply looking at the contract.

Thanks for the stories on AAHOA. 

Michael Webster PhD LLBFranchise News