Franchise arbitration

Franchise arbitration is the resolution of a dispute between a franchisor and franchisee by a private arbitrator rather than a court. It is available only if the franchise agreement, or a later agreement between the parties, provides for it. The arbitrator's award is generally final and binding, subject to limited rights of appeal or review.

How BC law treats it

In BC, the Franchises Act does not require arbitration or any specific dispute resolution mechanism, but a provision that restricts the application of BC law or restricts jurisdiction or venue to a forum outside BC is void for claims under the Act, including an arbitration provision (s. 12). Domestic arbitrations follow the Arbitration Act, SBC 2020, c 2, and arbitrations with a foreign franchisor may fall under the International Commercial Arbitration Act, RSBC 1996, c 233.

What it means for your business

A franchisee should check where any arbitration must take place, as a distant seat can make disputes costly.

Risks and common mistakes

Arbitration clauses can limit rights of appeal, and a clause requiring a seat outside BC, although void for claims under the Franchises Act, can still lead to costly disputes about forum.

For the full explanation, see our entry on Franchise litigation.

General information about British Columbia and Canadian law, current to October 2026. It is not legal advice.