Ten Reasons Franchisees Should Support the Arbitration Fairness Act of 2009

In urging support for the pending Arbitration Fairness Act, on June 22, 2009 I wrote an article entitled “Make Mandatory Arbitration Illegal:”

Many hotel franchise agreements stipulate arbitration over litigation.  At first glance, this may appear to be more beneficial to franchisees but nothing could be further from the truth.

Now, attorney Carmen D. Caruso, Esq. of Stahl Cowen has written a thoughtful and clear-thinking essay in support of the Arbitration Fairness Act of 2009.  Caruso writes:

Currently pending in the United States Congress, is an important piece of legislation that all franchisees should enthusiastically support….the proposed federal law would prohibit franchisors from including provisions that require mandatory arbitration of all disputes that might later arise during the term of the franchise agreement.  In the event a dispute later arises, the franchisor and franchisee would be free to arbitrate, but the franchisee could not be required to agree in advance (when signing the franchise agreement) to arbitrate any and all future disputes that may arise.

Caruso gives his top ten reasons why you should be writing your Congressional Representatives and Senators to strongly support the Arbitration Fairness Act of 2009:

1) Arbitration is arbitrary 2) Arbitration is expensive 3) Arbitration is often in the franchisor’s hometown 4) By agreeing to arbitrate, important statutory protections may be waived 5) Discovery is limited 6) Other important legal rights are also usually waived 7) The “savings” from arbitration are often elusive 8) Arbitrators are not necessarily better qualified  9) Arbitration impedes the development of the common law 10) Jury trials promote democracy.  Arbitration does not.

About the author: Stanley Turkel, MHS, ISHC operates his hotel consulting office as a sole practitioner specializing in franchising issues, asset management and litigation support services.  Turkel’s clients are hotel owners and franchisees, investors and lending institutions.  Turkel serves on the Board of Advisors and lectures at the NYU Tisch Center for Hospitality, Tourism and Sports Management.  He is a member of the prestigious International Society of Hospitality Consultants.  His provocative articles on various hotels subjects have been published in the Cornell Quarterly, Lodging Hospitality, Hotel Interactive, Hotel-Online, Blue MauMau, Hotel Resource News, etc.  Don’t hesitate to call 917-628-8549 or email [email protected].

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Comments

Arbitration

Agreements are found in the contracts or agreements that are authored by the party you are about to do business with. In the Franchise Agreement, the arbitration clause should be viewed as a Third Party Contract. The arbitration company is hired by the zor, so who are they really working for? It's not like going to court. The arbitration companies depend on REPEAT BUSINESS. They can only get that from the people who hire them.

Re :Arbitration

"Arbitration clause should be viewed as a Third Party Contract" = silly

Franchise disputes still turn on what's in the franchise agreement. The foolish idea that somehow a trial will changes the facts of the contract is an illusion many Zees have...they think wrongly if a judge/jury were to just hear all the injustices they would reform the franchise agreement and rule for the Zee!

However Zees will always win in the Court of BlueMaumau where they always win!