Where will arbitration occur for Aerus franchise agreements, and who bears the costs?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as may be otherwise provided hereunder in the case of actions for injunctive relief by Company or Company's Affiliates, the parties agree that all disputes, controversies or claims that may directly or indirectly arise among them (including their agents and employees), out of or relating to this Agreement and/or the Franchised Business, shall be submitted to, and determined by, binding arbitration. Any such action shall be conducted on an individual basis, and not as part of a consolidated, common, or class action, and Franchisee waives any and all rights to proceed on a consolidated, common, or class basis. Such arbitration shall be conducted before a single arbitrator in Dallas, Texas pursuant to the Commercial Arbitration Rules then in effect of the American Arbitration Association.
The arbitrator shall be an independent third party arbitrator selected by Company.8 The fees of the arbitration initially shall be paid one-half by Company and one-half by Franchisee; provided, however, that the prevailing party in any such arbitration shall be entitled to recover its reasonable attorneys' fees, costs and expenses (and any interest) incurred in connection with the arbitration.
Company shall not be liable to Franchisee or any of Franchisee's principals for any such dispute, controversy or claim in an aggregate amount greater than the total Standard Allocation collected from the Franchised Business during the six (6) month period immediately preceding the submittal of such dispute, controversy or claim to arbitration.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, any disputes arising from the franchise agreement will be settled through binding arbitration. The arbitration will take place in Dallas, Texas, before a single arbitrator selected by Aerus. This process is intended to be conducted on an individual basis, meaning franchisees waive their rights to participate in class action lawsuits against Aerus.
Initially, the fees for the arbitration will be split equally between Aerus and the franchisee. However, the prevailing party in the arbitration is entitled to recover their reasonable attorney's fees, costs, and expenses, along with any interest incurred during the process. This means that if a franchisee wins the arbitration, Aerus would have to cover the franchisee's legal costs, and vice versa.
It's important to note that Aerus's liability to the franchisee or their principals for any dispute is capped at the total Standard Allocation collected from the franchised business during the six months immediately preceding the arbitration. This limitation could significantly impact the potential recovery for a franchisee, depending on the nature and scale of the dispute. Franchisees should consider this limitation when evaluating the potential costs and benefits of pursuing arbitration against Aerus.