Can either Bang Cookies or the franchisee demand binding arbitration?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
- Article 18.G. of the Franchise Agreement, and if Franchisee executes a Development Agreement, Article 7.6 of the Development Agreement, under the heading "Choice of Law, Non-Binding Mediation, Binding Arbitration, and Consent to Jurisdiction", shall be amended by the addition of the following statement added after the end of the last sentence of Article 18.G. of the Franchise Agreement and Article 7.6 of the Development Agreement:
Illinois Addendum: Illinois law governs the agreements between the parties to this franchise.
FRANCHISOR AND FRANCHISEE AGREE THAT ALL PROCEEDINGS AND/OR LEGAL ACTIONS ARISING OUT OF OR RELATED TO THIS AGREEMENT AND/OR THE OFFER AND SALE OF THE BANG COOKIES FRANCHISE FROM FRANCHISOR TO FRANCHISEE, WILL BE CONDUCTED ON AN INDIVIDUAL BASIS AND NOT A CLASS-WIDE BASIS, AND THAT ANY PROCEEDING BETWEEN FRANCHISEE, FRANCHISEE'S OWNERS, SPOUSES AND/OR GUARANTORS AND FRANCHISOR AND/OR FRANCHISOR'S AFFILIATES, OFFICERS, DIRECTORS AND/OR EMPLOYEES MAY NOT BE CONSOLIDATED WITH ANY OTHER PROCEEDING BETWEEN FRANCHISOR AND ANY OTHER THIRD PARTY.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, Article 18.G of the Franchise Agreement outlines that choice of law, non-binding mediation, binding arbitration, and consent to jurisdiction will be amended for franchisees in Illinois. The Illinois Addendum states that Illinois law governs the agreements between the parties to the franchise.
Specifically, Section 4 of the Illinois Franchise Disclosure Act stipulates that any provision in a Franchise Agreement designating jurisdiction or venue outside of Illinois is void. However, the agreement may still provide for arbitration in a venue outside Illinois. This means that while Bang Cookies and its franchisees can agree to arbitration, the venue's location is subject to Illinois law for franchises operating in that state.
Additionally, both Bang Cookies and the franchisee agree that all proceedings and legal actions arising from the franchise agreement will be conducted on an individual basis, not as part of a class action. This is detailed in Article 18.O, titled "NO CLASS ACTION OR MULTI-PARTY ACTIONS," emphasizing that disputes must be resolved individually and cannot be consolidated with other proceedings involving third parties.