Under what condition does the arbitration clause not apply to a dispute, controversy, or claim with Anago?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
We and you agree that arbitration will be conducted on an individual basis and that an arbitration proceeding between us and our affiliates, or our and their respective shareholders, officers, directors, agents, and employees, on the one hand, and you (or your 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 your 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, the arbitration clause does not apply if a court or arbitrator determines that the clause prohibiting class-wide arbitration, consolidation with other proceedings, or representation by an association is unenforceable. In such cases, the dispute, controversy, or claim will be resolved in a judicial proceeding, following the dispute resolution provisions outlined in the Anago agreements.
This means that while Anago typically requires disputes to be settled through individual arbitration, there's an exception. If the restrictions on class actions or consolidated arbitrations are deemed unenforceable, the matter can be taken to court. This could occur if a law changes or if the specific circumstances of the dispute make the arbitration restrictions unfair or illegal.
For a prospective Anago franchisee, this clause offers a degree of protection. It prevents Anago from forcing franchisees into arbitration if the restrictions on collective action are found to be unenforceable. This ensures that franchisees have the option to pursue legal action through the courts, potentially with the combined resources of a class action, if the initial arbitration agreement is deemed unfair in its limitations.
It's important for potential franchisees to understand the implications of this clause. While arbitration is generally favored for its speed and cost-effectiveness, the ability to pursue a judicial proceeding under certain circumstances can provide additional legal recourse. Franchisees should consult with an attorney to fully understand their rights and options in case of a dispute with Anago.