According to the 7 Brew Franchise Agreement, where must disputes be arbitrated?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in franchise or other agreement | Summary | |
|---|---|---|---|
| u. Dispute resolution by | 21.F of Franchise | We and you must arbitrate all disputes within | |
| arbitration or mediation | Agreement | 10 miles of where we (or then-current | |
| franchisor) have our principal business | |||
| address when the arbitration demand is filed | |||
| (it currently is in Springdale, Arkansas) | |||
| (subject to applicable state law). | |||
| v. | Choice of forum | 21.H of Franchise | Subject to arbitration requirements, litigation |
| Agreement | must be (with limited exception) in courts | ||
| closest to where we (or then-current | |||
| 9(g) of Manufacturing | franchisor) have our principal business | ||
| Agreement | address when the action is commenced (it | ||
| currently is in Springdale, Arkansas) (subject | |||
| to applicable state law). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 54–61)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, disputes between 7 Brew and a franchisee must be arbitrated within a specific geographic radius of 7 Brew's principal business address. Specifically, the FDD states that arbitration must occur within 10 miles of where 7 Brew (or the current franchisor) has its principal business address when the arbitration demand is filed. Currently, 7 Brew's principal business address is in Springdale, Arkansas. This arbitration requirement is subject to applicable state law, which may introduce variations or exceptions.
For a prospective 7 Brew franchisee, this means that any legal disputes with the company will need to be resolved through arbitration, and the location of that arbitration will be near 7 Brew's headquarters in Springdale, Arkansas. This could present logistical and financial challenges for franchisees who are located far from Arkansas, as they would need to travel to attend arbitration hearings and potentially hire local legal representation.
It is common in franchising to include mandatory arbitration clauses in franchise agreements. These clauses are generally intended to provide a more efficient and cost-effective means of resolving disputes compared to traditional litigation. However, the specific location requirements, such as the one used by 7 Brew, can create an imbalance of power, potentially favoring the franchisor due to its proximity to the arbitration venue. Prospective franchisees should carefully consider this factor and seek legal counsel to understand the implications of the arbitration clause before signing the Franchise Agreement.
The FDD also mentions that litigation, subject to the arbitration requirements, must occur in courts closest to where 7 Brew (or the current franchisor) has its principal business address when the action is commenced, which is currently Springdale, Arkansas. This further emphasizes the importance of understanding the geographic implications of dispute resolution for potential franchisees.