Are there any exceptions to the requirement that all disputes with B Bops must be arbitrated?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
| T. Integration/merger clause | Section 26 | Only the terms of the Development Agreement, the documents referred to in and the attachments to the Development Agreement are binding. Any other oral or written promises related to the subject matter of the Development Agreement may not be enforceable. This is not intended to disclaim any representations made in this disclosure document. | |
|---|---|---|---|
| U. Dispute resolution by arbitration or mediation | Section 17 | Except for certain claims related to use of the Licensed Marks or proprietary information, all disputes must be arbitrated in Des Moines, Iowa. | |
| V. Choice of forum2 | Section 17 | Arbitration must be commenced in the State of Iowa. | |
| W. Choice of law2 | Section 25 | Iowa law applies (subject to state law). |
| Provision | Section in Application Agreement | Summary |
|---|---|---|
| A. Term of Agreement | Section 3 | The Company will inform you within 90 days from the effective date of the Application Agreement whether development rights or franchise rights will be granted. |
| B. Renewal or Extension of | None | Not applicable. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–49)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, dispute resolution through arbitration is generally required, but there are exceptions. Specifically, the FDD states that "Except for certain claims related to use of the Licensed Marks or proprietary information, all disputes must be arbitrated in Des Moines, Iowa." This means that if a dispute arises concerning B Bops's licensed marks (like logos or brand names) or its proprietary information (such as secret recipes or operational methods), those specific types of claims do not necessarily have to go through arbitration.
For a prospective B Bops franchisee, this is an important distinction. It suggests that while most disagreements will be handled via arbitration in Des Moines, Iowa, B Bops may pursue other legal avenues, such as lawsuits, to protect its trademarks and confidential business information. Franchisees should be aware that they might face different dispute resolution processes depending on the nature of the claim. Understanding what constitutes "Licensed Marks" and "proprietary information" is crucial, as these are the key areas exempted from mandatory arbitration.
This arrangement is not uncommon in franchising. Franchisors often reserve the right to take direct legal action to protect their brand and trade secrets, as these are vital assets. The arbitration clause and its exceptions are applicable to disputes arising from the Development Agreement. The FDD also specifies that arbitration must be commenced in the State of Iowa and Iowa law applies to these proceedings, subject to state law.
Therefore, a potential B Bops franchisee should carefully review the sections of the Franchise Disclosure Document that define licensed marks and proprietary information to fully understand the scope of the arbitration agreement and its exceptions. It would be prudent to seek legal counsel to clarify these terms and their implications for dispute resolution.