Margarita Calpotura Business Law Blog on Lawyers.com

The United States Constitution and many state constitutions provide a right to a jury trial.  However, franchisors have circumvented this right by including jury trial waiver provisions and/or arbitration clauses in franchise agreements.

This issue typically arises when a party to a franchise dispute (typically the franchisor) seeks to enforce the arbitration clause in a franchise agreement, and the other party (typically the franchisee) opposes arbitration, preferring to have the dispute decided in court.  In opposing the enforcement of the arbitration clause, some franchisees have argued that compelling the parties to resolve the dispute in arbitration violates their right to a jury trial.

In evaluating whether a party has waived its right to a jury trial, some courts have found that while the right to a jury trial is fundamental, parties can contractually waive that right.  For there to be a valid waiver of a fundamental right such as the right to a jury trial, however, there ordinarily must exist a knowing and intelligent waiver of the right.

Some franchise agreements contain explicit waivers, which courts have upheld as valid.  However, franchise agreements without an explicit waiver but with an arbitration clause have been held to contain an implied waiver of the right to a jury trial.  In finding this implied waiver, some courts have reasoned that an arbitration clause, by its very nature, waives a party’s right to have disputes resolved in court and creates the right to have them resolved by arbitration.

Although this and many other issues may not be negotiable, franchisees need to understand the risks and implications and know that not all franchisors are as aggressive.  Such issues should be considered in selecting a franchisor with whom the franchisee will have a long term relationship.

Every situation varies and knowledgeable California business law attorney should be consulted to help navigate these complex issues.

For questions, comments, or further information contact The Miller Law Group, P.C., at 650-566-2290, or go to http://www.millerlg.com.  Since 1981, attorney Mitchell Miller has served as counsel to numerous companies in a wide range of sectors, including real estate and development, hospitality, construction, and information technology.