Mandatory Binding Arbitration Isn't Just Bad For Consumers, It's Bad For Small Businesses

Mother Jones has an excellent writeup of Deborah Williams and Richard Welshans, the Maryland couple whose horrific experience with franchising a Coffee Beanery we’ve covered before. Inside, MoJo breaks down the arbitration award to show just how much more expensive arbitration is than litigation.

Since arbitration is a private system of justice, all the trappings of litigation, like court reporters and judges, are paid by the parties. In the Coffee Beanery case, that came to $35,000 for the reporter, $25,000 for the arbitrator and arbitration association, and several thousand for the opposing lawyers’ and witnesses’ lunches, commutes, and hotels.

Although the Sixth Circuit Court of Appeals eventually overturned the arbitration award, this is an unlikely outcome, and Coffee Beanery is planning to appeal. In the meantime, we can hope that Congress passes the Arbitration Fairness Act, which bans mandatory binding arbitration in consumer, employment, and franchise contracts.

Franchise Fraud: Wake Up and Smell the Fine Print [Mother Jones]
(Photo: Lisa Brewster)