Franchisees: do not conclude arbitration clauses, but do take out legal expenses insurance
In conflicts between franchisor and franchisee, it often happens that the parties do not fight with equal arms. This may be due, among other things, to the fact that the franchise agreement contains an arbitration clause. Arbitrators must be paid for by the parties. The costs of such a procedure can therefore turn out to be extremely high. In practice, this more than once means that the franchisee is unable to litigate against the franchisor, who is generally better able to finance arbitrators. Consequence: the franchisee has no possibility to start arbitration proceedings or sometimes even to defend himself. Arbitral clauses in franchise agreements therefore entail legal inequality. There is then no question of equality of arms, one of the basic principles in a civilized constitutional state.
In addition, it is more than once problematic for a franchisee to obtain legal assistance when this is indicated. If the franchisee needs to hire a lawyer, it is not always easy to pay this service provider. This problem can be overcome if the franchisee insures himself of legal assistance when entering into the franchise agreement by taking out legal assistance insurance. This prevents the franchisee from being unable to obtain adequate legal assistance on financial grounds.
Ludwig & Van Dam franchise attorneys, franchise legal advice
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