Is the arbitrator allowed to declare any Auntie Annes mark generic or invalid during arbitration?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
The arbitrator has the right to award or include in his or her award any relief which he or she deems proper, including 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 Mark generic or otherwise invalid or, except as expressly provided in Section 19.1.F. (Waiver of Punitive Damages), award any special, consequential, exemplary, or punitive damages against either party (we and you hereby waiving to the fullest extent permitted by law, except as expressly provided in Section 19.1.F. below, any right to or claim for any special, consequential, exemplary, or punitive damages against the other).
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, the arbitrator in any arbitration proceeding is explicitly prohibited from declaring any of Auntie Annes's marks as generic or invalid. This protects Auntie Annes's brand identity and trademarks.
This restriction on the arbitrator's power is significant for prospective franchisees. It means that during arbitration, a franchisee cannot argue that the Auntie Annes trademark is unenforceable due to being generic or invalid. This clause strengthens Auntie Annes's position in potential disputes, as the validity of their trademarks cannot be challenged in arbitration.
This type of clause is relatively common in franchise agreements. Franchisors typically want to protect their trademarks and brand identity, and this restriction ensures that an arbitrator cannot undermine those assets. Franchisees should be aware of this limitation and understand that they cannot use the argument of trademark invalidity during arbitration proceedings with Auntie Annes.