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Vol 8 (2010) - Issue 4

Franchising: “From whence we cometh to where we goeth”

Alexander Konigsberg QC

Although franchising, both domestically and internationally, has experienced what can only be characterized as spectacular growth over the last 20 to 30 years, all is nevertheless, not well. One only has to look at the multiplicity of lawsuits that are occurring on a daily basis between Franchisees and Franchisors, the failure of certain franchise systems, especially “start ups”, the lack of transparency in many franchise systems, and the palatable mistrust that exists between Franchisees and Franchisors. In addition, the constant threat of legislation specific to franchising, that can only negatively impact on franchising, even though this threat does not always result in actual legislation being adopted, does not bode well for the business of franchising. Although there are numerous explanations for the malaise affecting franchising, it is suggested that there are really two fundamental reasons which are the subject matter of this article.

Avoiding and managing system-wide litigation in international franchising

Mark Abell, Partner, Field Fisher Waterhouse LLP, London; Michael R. Daigle, Partner, Cheng Cohen LLC, Chicago, and; Michael J. Lockerby, Partner, Foley & Lardner LLP, Washington, D.C.

Many franchise systems over the years have faced class actions initiated by franchisees or consumers, multiple lawsuits prosecuted in multiple jurisdictions by disgruntled franchisees, and even administrative proceedings. Class actions certainly seem to have become more common in the United States. This paper addresses in detail how disputes with multiple franchisees across international borders can be managed or avoided. The authors also examine whether class actions in litigation or arbitration will become more prevalent, including in international disputes.