Will arbitration for All Team franchises be conducted on an individual or class-wide basis?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
extent permitted by applicable law. The arbitrator must submit a reasoned award and this award must be consistent with the terms of this Agreement. If the arbitrator's award is not reasoned or not consistent with the terms of this Agreement, then notwithstanding the foregoing, ATFC may appeal the arbitration award in Federal or State Court. An arbitration award or decision entered in any other case (whether or not ATFC was a party) will not be binding on ATFC in any other dispute, will have no precedential value and cannot be used as evidence in any other proceeding.
The arbitrator will apply the provisions of any applicable statute of limitations. In connection with any arbitration proceeding, ATFC and USER will submit or file any claim which would constitute a compulsory counterclaim (as defined by Rule 13 of the Federal Rules of Civil Procedure) within the same proceeding as the claim to which it relates. Any of these compulsory claims which are not submitted or filed in the same proceeding in which they relate will be barred. This provision will continue in full force and effect subsequent to and notwithstanding the Transfer, or the termination or expiration of the term of this Agreement. The arbitration will be conducted on an individual, not a class-wide basis. None of the parties to the arbitration will be entitled to consolidation of the arbitration proceedings with the proceedings of any third party, nor will the arbitrator or any court be empowered to order a consolidation of proceedings with any third party.
- A. Dispute Resolution Fee. In the event that the USER or its guarantors have not complied with the provisions in this Section on Dispute Resolution, USER shall reimburse ATFC for all of its expenses incurred in curing the USER's breach (including, without limitation, ATFC's attorneys' fees and costs related to dismissing and responding to any improperly filed claim) and pay the ATFC a Dispute Resolution Fee of $50,000 ("Dispute Resolution Fee"). USER acknowledg
Source: Item 23 — RECEIPT (FDD pages 34–161)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, arbitration will be conducted on an individual basis, not a class-wide basis. This means that any disputes between All Team and a franchisee that go to arbitration must be handled separately, and franchisees cannot join together to bring a single, collective claim. The FDD also specifies that neither party is entitled to consolidate arbitration proceedings with those of any third party, and no arbitrator or court is empowered to order such consolidation.
This requirement for individual arbitration has significant implications for prospective All Team franchisees. It prevents franchisees from leveraging the collective power of a class action to address widespread issues or grievances. Each franchisee must pursue their claims independently, bearing the associated costs and risks. This can be a disadvantage, especially when facing a large franchisor with greater resources.
Furthermore, the FDD states that if a franchisee fails to comply with the dispute resolution provisions, they may be required to reimburse All Team for all expenses incurred in curing the breach, including attorney's fees and costs, and pay a Dispute Resolution Fee of $50,000. All Team maintains the right to collect these amounts in addition to exercising any other rights for non-compliance under the agreement. This fee is acknowledged by the user as a reasonable estimate of damages and constitutes liquidated damages rather than a penalty.
In summary, the individual arbitration clause and the potential for a substantial Dispute Resolution Fee place a greater burden on the franchisee in resolving disputes with All Team. Prospective franchisees should carefully consider these factors and seek legal counsel to fully understand their rights and obligations under the franchise agreement.