What rules govern the arbitration process for Aw franchise disputes?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
have against us, whether or not arising from this Agreement, shall not constitute a defense to the enforcement by us of the covenants not to compete set forth in this Agreement. You further agree to pay all costs and expenses (including reasonable attorneys' and experts' fees) incurred by the us in connection with the enforcement of those covenants not to compete set forth in this Agreement.
18. DISPUTE RESOLUTION
18.1 Mandatory Mediation. Except for actions pursuant to Paragraph 18.3 below, prior to the initiation of arbitration or litigation by either party pursuant to this Agreement, the parties must make a good faith effort to resolve any controversies between them by non-binding mediation either through a mutually acceptable mediator or through an established mediation service selected by us (in either case, "Mediator"). Prior to mediation, each party involved in mediation shall sign the standard confidentiality agreement reasonably required by Mediator or a confidentiality agreement reasonably required by us if the Mediator does not have a standard confidentiality agreement. No arbitration or litigation proceeding may be commenced until the earlier of thirty (30) days from the selection of the Mediator, or the mutual agreement by both parties that mediation has been unsuccessful, or if the notified party fails to respond to the
requesting party within thirty (30) days of the delivery of notice requesting mediation. The parties will share equally all fees and expenses of the mediator.
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.
The arbitration rules provided for herein shall apply, and the arbitration may proceed, and the arbitrator has jurisdiction, regardless of whether any party fails to actively participate or appear. In the event that any party fails without good cause (i) to appear at any properly noticed arbitration proceeding; or (ii) to make payment in full of its share of the required arbitration fees and costs within ten (10) days after notice and demand, absent a previously issued court order to the contrary, then the arbitrator or the organization/entity administering the arbitration shall be authorized to enter a final award against such party, notwithstanding the failure to appear or to make the required payment.
18.3 Exceptions to Arbitration. Notwithstanding Section 18.2 above,
- (a) We are entitled, without being required to post a bond, to seek the entry of temporary and permanent injunctions and orders of specific performance in a court of competent jurisdiction to: (1) enforce the provisions of this Agreement relating to your use of the Marks and your non-disclosure and non-competition obligations under this Agreement; (2) prohibit any act or omission by you or your employees that constitutes a violation of any applicable law, ordinance or regulation, constitutes a danger to the public, or may impair the goodwill associated with the Marks or cause irreparable harm to us or the Papa Ray's Pizza franchises. You agree to waive any claims for damages in the event there is a later determination that an injunction or specific performance order was issued improperly.
- (b) We shall have the right to proceed by judicial process in lieu of arbitration to enforce your obligations to pay us under Section 10 of this Agreement and to seek collection of such fees due and owing to us.
- 18.4 Governing Law/Consent to Jurisdiction. All matters relating to arbitration shall be governed by the Federal Arbitration Act (9 U.S.C. Section 1 et. seq.). Except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sections 1051 et. seq.) or other federal law, this Agreement and franchise shall be governed by the laws of the State
of Illinois except to the extent that the law of the state in which your Papa Ray's Pizza Restaurant is located requires that it be governed by the laws of such state. To the extent any claim shall not be arbitrated as provided in Section 18.3, you irrevocably submit to the exclusive jurisdiction of any state or federal court of jurisdiction located in the State of Illinois and you (and your Owners) irrevocably submit to the exclusive jurisdiction of such court and waive any objection you may have to either the jurisdiction or venue of such court. You agree to the exclusive jurisdiction of such courts and agree not to sue us regarding any matter relating in any way to this Agreement except in such courts.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, disputes are primarily resolved through arbitration, preceded by mandatory mediation. Before initiating arbitration or litigation, both parties must first attempt to resolve controversies through non-binding mediation, using a mutually acceptable mediator or a service selected by Aw. A standard confidentiality agreement must be signed before mediation. Arbitration or litigation can only commence after 30 days from the selection of the mediator, mutual agreement that mediation failed, or if the notified party doesn't respond within 30 days of a mediation request. The costs of the mediator are shared equally between the parties.
If mediation fails, arbitration is the next step, unless Aw chooses to proceed via judicial process for specific issues. Arbitration occurs in Chicago, Illinois, with one arbitrator experienced in franchising, following the American Arbitration Association's commercial rules. Arbitrations are conducted individually and not on a class-wide basis. The arbitrator's award may be enforced in Cook County, Illinois, the franchisee's location, or any court with jurisdiction. All arbitration matters are governed by the Federal Arbitration Act.
However, there are exceptions where Aw can seek injunctions or specific performance orders in court to enforce provisions related to trademark use, non-disclosure, and non-competition, or to prevent actions violating laws or harming the brand's goodwill. Aw can also pursue judicial processes to enforce payment obligations under Section 10 of the agreement. Franchisees waive jury trials in any action related to the agreement. The arbitration rules apply regardless of a party's participation, and failure to participate or pay arbitration fees can result in a final award against the non-compliant party.
For franchisees, this means that most disputes will be handled through arbitration in Chicago, which may involve travel and associated costs. Franchisees should be aware of the exceptions where Aw can pursue court actions instead of arbitration, potentially leading to different legal proceedings. Additionally, Aw is entitled to reimbursement of costs and expenses, including accounting and legal fees, if a claim for amounts owed is asserted in any legal proceeding or if Aw is required to enforce the agreement, which could increase the financial burden on the franchisee in case of a dispute.