In some cases, it is necessary to have a court decide on an answer to your problem. This is where it is particularly important to understand what is stated in the contract. Can you afford litigation? Will you be required to litigate in the jurisdiction where your business is located, or must you file suit in the state or country where the franchisor is located? This may vary, so make sure you are aware of the contract terms before you sign the contract.

Another method of dispute resolution is mediation. A mediator will facilitate the process and help both sides clarify their arguments, but will not make a judgment on the matter. The franchisor and franchisee will resolve the dispute themselves, making all of the major decisions together. Therefore, none of the decisions made are binding.

The difference between arbitration and mediation is that an arbitrator renders a decision which must be followed, while a mediator shuttles between the two parties, attempting to discern their needs and ultimately bring them together while suggesting creative conclusions. Mediation should be used only if you wish to continue operating as a franchisee. If there is little or no trust between you and the franchisor, mediation will likely only cause more trouble.