The flash channel has collateral placed in it, which both users risk losing if they try to submit an invalid transaction.
Therefore there is a financial incentive for off-tangle transactions to be submitted and confirmed properly.
When you enter into a Flash channel you define the amount of collateral you will add to the channel. If you are starting a channel with an unknown partner you may open a low value channel or require the unknown partner to deposit a larger collateral into the channel.
If there is a dispute part way through a channel, a user can release the funds that have been approved during transactions by attaching the most recent channel state. The remaining funds will be deposited into the remainder address (generated at channel opening). These funds will remain here until both users agree to a division of funds and then sign a transaction releasing them.
Source: https://blog.iota.org/instant-feeless-flash-channels-88572d9a4385
