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Courts' Intervention in Arbitration Disputes Keeps Franchises Busy

By Kevin Adler
July 27, 2011

For many years, it's been assumed that when franchisors and franchisees are locked in an unsolvable dispute, franchisors prefer arbitration to courtroom litigation. Mandatory arbitration clauses have become standard-issue in franchise contracts, and, most likely, they have stifled a fair amount of courtroom action. Franchisors, and businesses generally, have found mandatory arbitration in class action litigation to be valuable.

However, litigation about whether mandatory arbitration clauses do, indeed, require arbitration seems to be a growth industry. Most recently, the U.S. Supreme Court, in ATT Mobility v. Concepcion, 563 U.S. __ (2011), upheld a mandatory arbitration clause in a consumer class action. The decision was widely viewed as a significant win for the business community.

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