What is the significance of Section 12.8 of the agreement in the context of arbitration with Aunt Millies Bakeries?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
pt that AUNT MILLIE'S agrees that it will not sell, nor require
DISTRIBUTOR to sell, the Distribution Rights, as called for by Section 9.4 above, until the dispute resolution process has been concluded or the time for either party to further proceed with dispute resolution has expired.
- §11.3 ARBITRATION: If the parties are unable to resolve the dispute through mediation, either party seeking relief shall file an arbitration demand within ten (10) days following the conclusion of the mediation process, which period shall constitute an agreed time limitation, and such demand shall be limited to the cause(s) of action within the scope of the mediation conducted in accordance of Section 11.2 above. Any dispute between the parties subject to this Article shall be decided by neutral, binding arbitration conducted in accordance with the Judicial Arbitration and Mediation Services, Inc. ("JAMS"). The arbitration shall be conducted by one arbitrator and shall be held in the county where the principal place of business of DISTRIBUTOR is then located. The arbitrator shall apply the substantive law specified in Section 12.8 of this Agreement, except that with respect to arbitration matters, the provisions of the Federal Arbitration Act shall be controlling. Judgment upon the award rendered by the arbitrator shall be final and binding and may be entered in any court having jurisdiction thereof.
- §11.4 BUSINESS JUDGMENT: The parties hereto recognize, and any mediator, arbitrator or judge is affirmatively advised, that this Agreement reserves to AUNT MILLIE'S the right to take (or refrain from taking) certain actions in the exercise of its business judgment based on its assessment of the overall best interests of the network and/or Distribution Program.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries's 2025 Franchise Disclosure Document, Section 11.3 outlines the arbitration process, stating that any dispute between the parties will be decided by neutral, binding arbitration following the rules of the Judicial Arbitration and Mediation Services, Inc. ("JAMS"). The arbitration will be conducted by a single arbitrator in the county where the distributor's principal place of business is located. Importantly, the arbitrator must apply the substantive law specified in Section 12.8 of the agreement, except for arbitration matters, which are governed by the Federal Arbitration Act. The arbitrator's judgment is final, binding, and can be entered in any court with jurisdiction.
Section 12.8, titled "Controlling Law," specifies that the laws of Indiana govern the validity, interpretation, and performance of the agreement, without regard to its choice of law provisions. However, the Indiana Franchise Law and the Indiana Deceptive Franchise Practices Act will only apply if the jurisdictional prerequisites for their application are met independently of Section 2.8. This means that while Indiana law generally applies, specific Indiana franchise laws may not automatically apply unless the situation independently meets the requirements for those laws.
In practical terms, this means that if a dispute arises and proceeds to arbitration, the arbitrator will primarily use Indiana law to interpret the agreement and make a decision. However, the Federal Arbitration Act will take precedence on specific arbitration procedures. A prospective Aunt Millies Bakeries franchisee should be aware that the location of their principal place of business will determine where the arbitration takes place. They should also understand the circumstances under which Indiana's specific franchise laws would or would not apply, as this could affect their rights and obligations during a dispute.