• 한국중재학회지:중재연구
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• 제29권1호
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• pp.3-29
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• 2019

A franchise business is a business in which the owners, or "franchisors," sell the rights to their business logo, name, and model to third party retail outlets, owned by independent, third party operators, called "franchisees." There are a number of features in franchising or terms in franchise agreements that may lead to disputes between franchisors and franchisees. These disputes may arise because of underlying risks in the franchise relationship, franchise agreement, or conduct of the parties. In this case, ADR is an effective way to resolve disputes in a quicker and often less costly way than having to go to court. If an agreement cannot be reached through mediation, then arbitration becomes the next step to resolving the differences. Whereas mediation is non-binding and focused on facilitating the parties to find a resolution that is acceptable to both, arbitration is binding and may result in a decision that is not acceptable to one of the parties. These situations can be resolved through experienced arbitration as arbitration allows franchisees to settle matters promptly and outside of the public eye. In addition, franchise dispute arbitration is usually less costly than going to traditional court. Considering all of these, reaching an agreement will also have typical clauses that address the issue of dispute resolution. It is again a more efficient process than going through the legal process and courts and is often less costly. By going through arbitration, the parties agree to give up their rights to pursue the dispute in the courts. However, there is a problem that the arbitration prior to the agreement and under the terms would be contrary to the restriction of jurisdiction under the "ACT ON THE REGULATION OF TERMS AND CONDITIONS" in Korea.