Recently in Korea, franchise system has been specially used in the distribution industry. However, it also brought up many problems caused by various issues between franchisor and franchisee. The purpose of this article is to review recent trend of the franchise transaction contracts and resolution of the disputes in Korea. And to expand to use of ADR(Alternative Dispute Resolution) system as a practical dispute settlement procedure including mediation and arbitration. Arbitration means a procedure to settle any dispute in private laws, not by the adjudication of a court, but by the award of an arbitrator or arbitrators, as agreed by the parties. Arbitration agreement is a prerequisite for either party to a dispute to commence arbitral proceeding and may be in the form of a separate agreement or in the form of an arbitration clause in a contract and shall be in writing.