What happens if a party fails to actively participate in the Alloy arbitration?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
This arbitration provision is self-executing. Specifically, the arbitration may proceed, and the arbitrator has jurisdiction, regardless of whether any party fails to actively participate or appear. In the event that any party fails without good cause (i) to appear at any properly noticed arbitration proceeding; or (ii) to make payment in full of its share of the required arbitration fees and costs within ten (10) days after notice and demand, absent a previously issued court order to the contrary, then the arbitrator or the organization/entity administering the arbitration shall be authorized to enter a final award against such party in the nature of a default judgment or otherwise, notwithstanding the failure to appear or to make the required payment.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the arbitration process is self-executing, meaning it can proceed regardless of whether a party actively participates or appears. If a party fails to appear at a properly noticed arbitration proceeding or fails to pay their share of arbitration fees and costs within ten days of notice and demand without good cause or a court order, the arbitrator or administering organization can enter a final award against that party, similar to a default judgment. This ensures that the arbitration can move forward even if one party is uncooperative.
This provision is significant for prospective Alloy franchisees because it outlines the consequences of not participating in arbitration. It emphasizes the importance of engaging in the arbitration process if a dispute arises. Failing to participate can result in a default judgment against the non-participating party, which could have serious financial and legal repercussions.
It is important to note that the arbitrator still has certain limitations. They cannot stay the termination of the franchise agreement, assess punitive damages, or modify any lawful term of the agreement or reasonable business performance standards set by Alloy. The arbitrator must also have at least 5 years of experience in franchise law. This ensures that while the arbitration can proceed without full participation, there are still checks and balances in place to protect both parties' interests.