Litigation vs. Arbitration: Optimal Dispute Resolution Mechanisms for Franchise Agreements in India

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Resolving a dispute is always a complex task in any business model, as it involves taking numerous decisions, and if a single decision goes wrong, everything can go in vain. Thus, businesses always beforehand choose that if any dispute arises in the future, which way or method of resolution they would choose, which would be, if not completely beneficial, then at least the least difficult for them in every aspect. And under the franchise model also, the franchisors prefer to include a dispute resolution clause in their franchise agreement to ensure that if they get in trouble into future, which method would be best suited for them. The franchisor usually prefers to discuss the choice of mechanism to resolve disputes with the franchisee so that later on there’s no wastage of time in deciding the mechanism. However, if the franchisor wants, he can alone decide the mechanism and write it in the agreement clause, which has to be complied with by the franchisee to get the franchise.