The hotel industry franchise continue to boom. However, this thrive comes with its own risks. One main concern is the issue of disputes.
Unlike other franchise industries, the hotel franchise is not subjected to any federal regulations. Meaning, there is no federal law that can protect the franchisees from any wrongful dealings.
While this is true, hotel franchises have laws that regulate franchises in general. For instance, a franchisor is obligated to ensure full disclosure before a franchisee gets to sign a franchise agreement.
In any franchise business, both the franchisor and the franchisee have to strive to ensure they maintain their relationship. This ensures they continue to strive to the constantly changing environment. Though the efforts, disagreement always arises.
Understanding how to resolve disputes in any franchise business is paramount.
Do You Have Dispute On A Hotel Franchise?
For any franchise business, there comes a time when parties will not share the same opinions. This brings about dispute resolution to try to solve the disputes. One best way that proves to be cost-effective and consuming less time is alternative dispute resolution.
Both the franchisor and franchisee can use it to work around the methods and avoid litigation.
The commonly used and effective method is arbitration. This is a method by with an arbitrator review the arguments present by both parties.
There are many benefits a hotel franchisee can get from an arbitrator. Some of them include:
- You will use fewer costs to arbitrate your legal issues. Meaning, you only need to pay the arbitrator and your lawyer.
- Your final verdict will be enforceable in court.
- There is a lot of privacy for both parties.
The difference with alternative arbitrations such as medication is that whatever decision comes up with the mediator is not binding.
Solving Disputes In Hotel Industry
Previous disputes in the hotel industry have shown that disagreements arising thereof are better settled through arbitration. They may have a franchise arbitration agreement clause in the FDD.
While a franchise arbitration clause is not necessary for a franchise agreement, it greatly assists when a dispute arises.
Both parties can choose to have a harmonized way to solve their disputes. But if parties cannot agree, you don’t have to give up your rights as a franchisee. You can proceed to litigation.
Just like any other franchise industry, hotel franchisees face lots of challenges.
Many states have regulations on the franchise business. However, such regulations may be disparate and may not fully provide the right legal protection to hotel industry franchisees. For that case, a franchise should contact the best franchise law firms in case of any dispute.
This proves to be the only best way to negotiate ground on the terms of the franchise agreement. Franchisees who fail to take right legal precautions may find the business riskier.
Note that you may choose to have an online dispute resolution where you don’t need to meet face to face. Due to the improved accessibility, you and the franchisor can have an easier time resolving your disputes.
While a franchisor provides the franchisee with access to an already recognized brand, still issues may crop up.
It argued that an arbitration agreement is more favorable to the franchisor compared to a franchisee. One reason is due to the issue of privity. But this is not necessarily the truth. The use of the process is tested in its merits. The arbitrator has to ensure that the clause provided is fair to both parties.
As a franchisee, you only need to be aware that some factors may affect the clause based on its enforceability and modification. As a franchisee, you get the chance to determine the particulars of the provisions such as:
- What law is to be applied.
- Where the arbitration will take place.
- The qualifications and how many arbitrators will oversee your case.
- The procedure needed for the arbitration process.
To benefit from the plan, both the franchisor and the franchisee have to agree on the above. But even if the process of arbitration is not indicated in the franchise agreement, both parties should not be prevented from agreeing on the best method of their choice for settling disputes.
If you face a dispute with your hotel franchisor, you may choose to obtain a resolution through the arbitration method.
You can consider dealing with your disagreement before they become full-fledged disputes that will end up in court.
Hotel industry franchise management has raised that arbitration may be a reasonable, fair, and economical way to resolve conflicts due to the escalating costs associated with litigation.
If you are considering a hotel franchisee startup or in one already, you have to consider that disputes will arise. It’s therefore prudent to have a franchise attorney handle your issues. This way, you can rest assured that your legal interest is taken care of. Not only that, you will have profound experience on how to deal with the hotel franchisor.