Can arbitration between Anago and the Subfranchisor be conducted on a class-wide basis?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
Procedure) within the same proceeding. Any claim which is not submitted or filed as required will be forever barred. The arbitrator may not consider any settlement discussions or offers that might have been made by either Subfranchisor or Franchisor.
Franchisor and Subfranchisor agree that arbitration will be conducted on an individual basis and that an arbitration proceeding between Franchisor and Franchisor's affiliates, or Franchisor and their respective shareholders, officers, directors, agents, and employees, on the one hand, and Subfranchisor (or Subfranchisor's owners, guarantors, affiliates, and employees), on the other hand, may not be: (i) conducted on a class-wide basis, (ii) commenced, conducted or consolidated with any other arbitration proceeding, or (iii) brought on Subfranchisor's behalf by any association or agent. Notwithstanding the foregoing, if any court or arbitrator determines that all or any part of the preceding sentence is unenforceable with respect to a dispute, controversy or claim that otherwise would be subject to arbitration under this Section, then all parties agree that this arbitration clause shall not apply to that dispute, controversy or claim and that such dispute, controversy or claim shall be resolved in a judicial proceeding in accordance with the dispute resolution provisions of the Agreements.
Despite Franchisor's and Subfranchisor's agreement to arbitrate, Franchisor and Subfranchisor each have the right in a proper case to seek temporary restraining orders and temporary or preliminary injunctive relief from a court of competent jurisdiction; provided, however, that Franchisor and Subfranchisor must contemporaneously submit our dispute, controversy or claim for arbitration on the merits as provided in this Section.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, arbitration between Anago and a Subfranchisor will be conducted on an individual basis. The agreement explicitly states that arbitration proceedings cannot be conducted on a class-wide basis. This means a Subfranchisor cannot participate in a collective arbitration against Anago.
This restriction extends to preventing the commencement, conduct, or consolidation of arbitration with any other proceeding. It also prohibits any association or agent from bringing a claim on behalf of the Subfranchisor in arbitration. This ensures that each dispute is handled separately and prevents the aggregation of claims into a larger, more complex case.
However, there is an exception to this rule. If a court or arbitrator determines that the prohibition of class-wide arbitration is unenforceable, then the arbitration clause itself will not apply to that specific dispute. In such cases, the dispute will be resolved in a judicial proceeding, following the dispute resolution provisions outlined in the Anago agreements.
This clause also specifies that document requests in arbitration are limited to those directly relevant to significant issues and restricted in scope. Interrogatories and requests to admit are not allowed, and electronic discovery is also subject to specific limitations. These measures aim to streamline the arbitration process and prevent overly broad or burdensome discovery requests.