Can the arbitrator award interest on damages for breach of the Auntie Annes franchise agreement?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
The parties agree that the arbitrator may award interest from the date of any damages incurred for breach or other violation of this Agreement, and from the date of the award, until paid in full, at a rate to be fixed by the arbitrator, but in no event less than 2.5% per annum above the Citibank Preference Rate quoted for the
corresponding periods, as reported in The Wall Street Journal, or the maximum rate permitted by applicable law, whichever is less.
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Anne's 2024 Franchise Disclosure Document, in disputes resolved through arbitration, the arbitrator has the authority to award interest on damages. This interest can be applied from the date the damages were incurred due to a breach or violation of the Franchise Agreement, as well as from the date of the arbitration award itself, until the full amount is paid.
The interest rate will be determined by the arbitrator, but it will not be less than 2.5% per annum above the Citibank Preference Rate quoted for the corresponding periods, as reported in The Wall Street Journal, or the maximum rate permitted by applicable law, whichever is less. This provision ensures that Auntie Anne's franchisees may be required to pay interest on any damages awarded against them in arbitration, potentially increasing the financial burden of an unfavorable decision.
This is a fairly standard clause in franchise agreements, as it incentivizes both parties to resolve disputes efficiently and to promptly comply with arbitration awards. However, franchisees should be aware of this potential added cost when considering the financial implications of any disputes with Auntie Anne's.