Franchisors that aim to comply with registration law
requirements explicitly specify performance standards, thus
providing a more objective benchmark of performance
against which they may evaluate franchisee efforts. Perhaps
most importantly, franchisee noncompliance with explicitly
stated obligations is also more easily verifiable by relevant
third parties (i.e., legal courts) (Drahozal and Hylton 2003).
Enhanced verifiability and greater ease of demonstrating
franchisee noncompliance in registration law states may
prompt the franchisor to adopt a less conciliatory stance when
serious disputes arise. This is reflected in an increased likelihood
of the franchisor initiating litigation and a decreased
likelihood of it settling for anything less than its full claim.