Relative to registration law, the impact of relationship
law on litigation is more straightforward. The increased difficulty
of franchisee termination brought about by relationship
law results in a corresponding increase in the incidence
of franchisor-franchisee litigation. Such an increase may be
anticipated either as a function of the empowerment of franchisees
by relationship law or as a direct result of increasedfranchisee shirking and the enforcement response it elicits
from franchisors. The present analysis provides greater support
for the former thesis. Note that our findings explicitly
suggest that the franchisee is more likely to initiate litigation
in relationship law states, typically in response to perceived
franchisor moral hazard. Although the end result of
increased litigation is probably not what regulators
intended, it is evident that relationship law has prompted a
greater appreciation among franchisees of their rights.