Under what condition is the prohibition of class-wide arbitration for Anago disputes unenforceable?
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, Anago's and the subfranchisee's agreement to conduct arbitration on an individual basis is not absolute. Specifically, the prohibition against class-wide arbitration, consolidation with other proceedings, or representation by an association becomes unenforceable if a court or arbitrator determines that any part of the agreement is unenforceable concerning a dispute that would otherwise be subject to arbitration.
In such cases where the prohibition on class-wide arbitration is deemed unenforceable, the arbitration clause itself becomes inapplicable. Consequently, the dispute, controversy, or claim will be resolved through a judicial proceeding, following the standard dispute resolution provisions outlined in the Anago agreements.
This means that while Anago prefers disputes to be handled individually through arbitration, this preference can be overridden by a court or arbitrator's decision. If a franchisee were to successfully argue that the class-wide arbitration waiver is unenforceable, they could pursue their claim in court, potentially as part of a class action. This clause aims to ensure that franchisees are not unduly restricted from seeking legal remedies if the arbitration agreement is found to be unfair or unenforceable in any way.