If a controversy, dispute, or claim is not resolved internally, does Anago require binding arbitration?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
or claim internally within sixty (60) days ("Internal Dispute Resolution Deadline") of submission of all information reasonably requested by the receiving party, unless the parties mutually agree to extend the Internal Dispute Resolution Deadline. If any such controversy, dispute, or claim is not resolved internally as described above then Franchisor and Subfranchisor agree that such controversy, dispute, or claim between Franchisor or Franchisor's affiliates, and Franchisor and their respective shareholders, officers, directors, agents, and employees, on the one hand, and Subfranchisor (and Subfranchisor's owners, guarantors, affiliates, and employees), on the other hand, must be submitted for binding arbitration, on demand of either party, to the American Arbitration Association. The arbitration proceedings will be conducted by one arbitrator and, except as this Section otherwise provides, according to the then-current Commercial Arbitration Rules of the American Arbitration Association. All proceedings will be conducted at a suitable location chosen by the arbitrator in or within 50 miles of Franchisor's then-current principal place of business (currently, Pompano Beach, Florida). All matters relating to arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.). Judgment upon the arbitrator's award may be entered in any court of competent jurisdiction.
The arbitrator has the right to award or include in his or her award any relief which he or she deems proper, including, without limitation, money damages (with interest on unpaid amounts from the date due), specific performance, injunctive relief, and attorneys' fees and costs, provided that the arbitrator may not declare any of the trademarks owned by Franchisor or Franchisor's affiliates generic or otherwise invalid or, except as expressly provided in this Section, award any punitive, exemplary, or multiple damages against any party to the arbitration proceeding (Franchisor and Subfranchisor hereby waive to the fullest extent permitted by law any such right to or claim for any punitive, exemplary, or multiple damages against any party to the arbitration proceedings).
Franchisor and Subfranchisor agree to be bound by the provisions of any applicable
contractual or statutory limitations provision, whichever expires earlier. Franchisor and Subfranchisor further agree that, in any arbitration proceeding, each party must submit or file any claim which would constitute a compulsory counterclaim (as defined by Rule 13 of the Federal Rules of Civil 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.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, if a controversy, dispute, or claim is not resolved internally between the Franchisor and Subfranchisor, it must be submitted for binding arbitration if either party demands it. This arbitration is managed through the American Arbitration Association, utilizing one arbitrator and adhering to the Association's Commercial Arbitration Rules. The arbitration location will be selected by the arbitrator, within 50 miles of Anago's principal business location, which is currently Pompano Beach, Florida. The Federal Arbitration Act governs all arbitration-related matters.
This mandatory binding arbitration clause means that prospective Anago subfranchisees waive their right to sue Anago in court regarding disputes. Instead, they must resolve disputes through arbitration, which is generally faster and less expensive than litigation, but also has limited appeal options. The location of the arbitration in Florida could present a cost challenge for franchisees located further away.
Notably, the FDD specifies that arbitration will be conducted on an individual basis, preventing class-action lawsuits. However, a court or arbitrator can deem the prohibition of class-wide arbitration unenforceable, in which case the arbitration clause will not apply, and the dispute will be resolved in a judicial proceeding. Despite the arbitration agreement, both Anago and the subfranchisee retain the right to seek temporary restraining orders and injunctive relief from a court, provided they simultaneously submit the dispute for arbitration.