Kevin M. Kennedy

Drafting an Enforceable Franchise Agreement Arbitration Clause

October 13, 2002 Published Work
Reprinted with Permission of the Franchise Law Journal (American Bar Association), Volume 22, Number 2, Fall 2002

The U.S. Supreme Court declared more than two decades ago that the Federal Arbitration Act (FAA) embodies "a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary." The purpose of the Act, according to the Court, is to "move the parties out of court and into arbitration as quickly as possible." Thus, in resolving challenges to an arbitration clause, the FAA "establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to the arbitrability."
With pronouncements like these coming from the highest court in the land, one would think that enforcing arbitration clauses in commercial contracts would be easy. Think again.