Can arbitration for Alloy disputes proceed as a class action?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Any arbitration must be on an individual basis and the parties and the arbitrator will have no authority or power to proceed with any claim as a class action or otherwise to join or consolidate any claim with any other claim or any other proceeding involving third parties.
In the event a court determines that this limitation on joinder of or class action certification of claims is unenforceable, then this entire commitment to arbitrate will become null and void and the parties must submit all claims to the jurisdiction of the courts.
The arbitration must take place in the city of our then-current headquarters.
The arbitrator must follow the law and not disregard the terms of this Agreement or disregard the law based on principles of justice or equity which are not a specific part of the applicable law.
The arbitrator must have at least 5 years of significant experience in franchise law. A judgment may be entered upon the arbitration award by any state or federal court in the state where we maintain our headquarters or the state where your Facility is located. The decision of the arbitrator will be final and binding on all parties to the dispute; however, the arbitrator may not under any circumstances: (1) stay the effectiveness of any pending termination of this Agreement; (2) assess punitive or exemplary damages; or (3) make any award which extends, modifies or suspends any lawful term of this Agreement or any reasonable standard of business performance that we set.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, any arbitration must be on an individual basis. The agreement explicitly states that neither the parties nor the arbitrator have the authority to proceed with any claim as a class action, or to consolidate claims with other claims or proceedings involving third parties. This means that each franchisee must pursue their disputes independently, and cannot join forces with other franchisees to bring a collective action against Alloy. This is a common practice in franchising agreements.
However, there is a condition attached to this restriction. If a court determines that the limitation on class action certification of claims is unenforceable, the entire agreement to arbitrate becomes null and void. In such a case, all claims must be submitted to the jurisdiction of the courts, rather than proceeding through arbitration. This clause provides a potential avenue for franchisees to pursue class actions if the initial arbitration agreement is deemed unenforceable by a court.
The arbitration itself must take place in the city of Alloy's then-current headquarters. The arbitrator is required to have at least 5 years of significant experience in franchise law and must follow the law, without disregarding the terms of the agreement. A judgment upon the arbitration award may be entered by any state or federal court in the state where Alloy maintains its headquarters or where the franchisee's facility is located. The arbitrator's decision is final and binding, but they are restricted from staying any pending termination of the agreement, assessing punitive damages, or modifying any lawful term of the agreement or any reasonable standard of business performance set by Alloy.