Can any association or agent bring an arbitration proceeding on behalf of the franchisee against Anago?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, a Subfranchisor (or Subfranchisor's owners, guarantors, affiliates, and employees) cannot have an arbitration proceeding brought on their behalf by any association or agent against Anago or Anago's affiliates. This restriction is part of an agreement that arbitration will be conducted on an individual basis.
However, if a court or arbitrator determines that the restriction preventing class-wide arbitrations or arbitrations brought by an association or agent is unenforceable, then the agreement to arbitrate the specific dispute, controversy, or claim becomes void. In such cases, the dispute would be resolved in a judicial proceeding as per the agreements' dispute resolution provisions.
This clause ensures that disputes are handled individually, preventing class action lawsuits or representation by associations. However, this is contingent on the enforceability of the clause, as a court or arbitrator could deem it unenforceable, thereby nullifying the arbitration agreement for that particular dispute. This could lead to the dispute being resolved in court rather than through arbitration.