Under the Auntie Annes franchise agreement, can arbitration proceedings be conducted on a class-wide basis?

According to Auntie Annes's 2024 Franchise Disclosure Document, arbitration proceedings between Auntie Annes and a franchisee will be conducted on an individual basis, not a class-wide basis. The franchise agreement explicitly states that an arbitration proceeding between Auntie Annes and a franchisee cannot be consolidated with any other arbitration proceeding between Auntie Annes and another person. This means each franchisee must pursue their claims individually.

However, there is a condition to this rule. If any court or arbitrator determines that the prohibition on class-wide arbitration is unenforceable with respect to a dispute that would otherwise be subject to arbitration, then the arbitration clause does not apply to that dispute. In this case, the dispute will be resolved in a judicial proceeding.

This clause has significant implications for prospective Auntie Annes franchisees. It generally prevents franchisees from joining together to pursue collective claims against the franchisor through arbitration. However, the enforceability of this prohibition is subject to legal interpretation, and a court or arbitrator could potentially invalidate it, allowing for class-wide actions in certain circumstances. Franchisees should be aware of this limitation and consult with legal counsel to understand their rights and options in case of a dispute with Auntie Annes.