A recent California court decision rejects the contention by franchisees, who sued their franchisor, that the arbitration provision in their franchise agreement should not be enforced because it is unfair and unconscionable.
A new ruling by the United States Court of Appeals for the First Circuit in Awuah v. Coverall case is yet the latest in a string of recent court decisions that confirm the strength and enforceability of arbitration clauses in franchise agreements.
A recent decision by a Court of Appeals in Missouri highlights the importance for franchisors of careful drafting of the arbitration clauses in their franchise agreements. Litigation over issues like this — whether a dispute must be submitted to arbitration or instead whether it can be decided by a court — is a huge drain on the parties’ resources (time and money). A franchisor would be well-advised to think carefully about heavily one-sided arbitration clauses before including them in its agreements.