What should prospective Amorino franchisees do regarding the arbitration clause and its potential restrictions on venue outside of California?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
d travel and other expenses of the arbitrator, AAA representatives, and any witness and the cost of any proof produced at the direct request of the arbitrator, shall be borne equally by the parties, unless they agree otherwise or unless the arbitrator in the award assesses such expenses or any part thereof against any specified party or parties. Prospective franchisees are encouraged to consult private legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code Section 20040.5, Code of Civil Procedure Section 1281, and the Federal Arbitration Act) to any provisions of a franchise agreement restricting venue to a forum outside the State of California.
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- The franchise agreement requires the application of the laws of the state of Delaware. This provision may not be enforceable under California law.
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- Section 31125 of the California Corporations Code requires us to give you a disclosure document, in a form containing the information that the commissioner may by rule or order require, before a solicitation of a proposed material modification of an existing franchise.
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- You must sign a general release if you renew or transfer your franchise. California Corporations Code 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code 31000 through 31516).
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, prospective franchisees should seek independent legal counsel to understand how California and federal laws might apply to franchise agreement terms that restrict venue to locations outside of California. This is particularly important because the franchise agreement necessitates adherence to Delaware law, which may not be enforceable under California law.
Specifically, the FDD highlights that the franchise agreement mandates binding arbitration, which will occur at the AAA office in New York County, New York. The initial filing fee for arbitration is the responsibility of the party making the claim, but the arbitrator will make the final decision on how the costs are divided. Each party is responsible for the costs of their own witnesses. Unless otherwise agreed, the parties will equally share all other arbitration expenses, such as travel and costs for the arbitrator, AAA representatives, any witnesses, and any evidence requested directly by the arbitrator; however, the arbitrator has the authority to assign these expenses to a specific party or parties.
Given these stipulations, Amorino franchisees in California should be aware that certain provisions in the franchise agreement may not be fully enforceable under California law. Consulting with legal counsel will help them understand their rights and obligations, especially concerning dispute resolution and the potential costs and inconvenience associated with arbitrating claims in New York.