Can arbitration proceedings involving Aw franchise be conducted on a class-wide basis?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
18.2 Arbitration. Except to the extent we elect to proceed by judicial process as provided in Paragraph 18.3 below, any controversy, dispute, claim or question arising out of, in connection with, or in relation to this Agreement or its interpretation, performance, or any breach thereof, which cannot be settled amicably between the parties shall be determined solely and exclusively by arbitration with venue in Chicago, Illinois and shall be heard by one arbitrator that has specific franchise experience in accordance with the then existing commercial Rules of the American Arbitration Association ("Rules"). The parties hereby agree that arbitration shall be conducted on an individual, not a class-wide basis, and that an arbitration proceeding between us shall not be consolidated with any other arbitration proceeding involving us and any non-party to this Agreement, including other franchisees. Judgment upon any award, which may include an award of damages, may be entered in the courts of Cook County, Illinois, in the court of any jurisdiction in which you are located, or in any other court having jurisdiction thereof.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, arbitration proceedings will be conducted on an individual basis, not a class-wide basis. This means that any dispute arising from the franchise agreement must be pursued individually by the franchisee. Franchisees are not allowed to consolidate their arbitration proceedings with other franchisees or any other non-party to the agreement.
This requirement for individual arbitration has significant implications for prospective Aw franchisees. It prevents franchisees from joining together to pursue collective claims against Aw, which could be beneficial in cases where multiple franchisees have similar grievances. The inability to pursue class-wide arbitration may increase the financial burden on individual franchisees, as they must bear the full costs of arbitration, including legal fees and expenses, on their own.
The FDD specifies that the arbitration venue will be in Chicago, Illinois, and will be heard by one arbitrator with specific franchise experience, following the commercial Rules of the American Arbitration Association. This ensures that the arbitration process is governed by established rules and procedures. However, the individual nature of the arbitration means that each franchisee must navigate this process independently, without the collective support or resources that a class-wide action would provide.
While Aw mandates individual arbitration, franchisees retain the right to seek judgment upon any arbitration award in the courts of Cook County, Illinois, the jurisdiction where the franchisee is located, or any other court with jurisdiction. This provides a mechanism for enforcing the arbitrator's decision, but it does not alter the fundamental requirement that the arbitration itself be conducted on an individual basis.