Can either the Franchisor or Franchisee demand binding arbitration for Bang Cookies franchise disputes?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
(2) Arbitration – Subject to the prerequisite requirements of non-binding mediation as set forth in Sub-Section 7.6(1), and, except, at Franchisor's election, as to any claims or disputes related to or concerning a breach of this Agreement by Franchisee that, under the terms of this Agreement, may entitle Franchisor to the award of injunctive relief, Franchisor and Franchisee agree that all disputes, controversies, and claims, arising from and/or related to this Agreement, the relationship between Franchisor and Franchisee, the System, and/or the validity of this Agreement and/or the Ancillary Agreements, shall be submitted, on demand of either Franchisor or Franchisee, to the AAA for binding arbitration. Arbitration shall be conducted by one arbitrator in accordance with the AAA's then current rules for commercial disputes, except as may be otherwise required in this Article 7.6. All arbitration proceedings shall be conducted in Bergen County, New Jersey or, if suitable AAA facilities are not available in Bergen County, New Jersey then at a suitable AAA location selected by the arbitrator that is located closest to Bergen County, New Jersey.
In connection with binding arbitration, Franchisor and Franchisee further agree that:
(a) All matters relating to arbitration, will be governed by the United States Federal Arbitration Act, except as expressly or otherwise set forth in this Agreement;
(b) The arbitration hearing shall be conducted within 180 days of the demand for arbitration;
(c) The arbitrator shall render written findings of fact and conclusions of law;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, both the franchisor and franchisee can demand binding arbitration to resolve disputes. However, this is subject to a prerequisite of non-binding mediation. The demand for arbitration can be made by either party to the American Arbitration Association (AAA). Unless the dispute involves a breach that entitles Bang Cookies to injunctive relief, or claims related to the failure to pay fees or other monetary obligations, mediation is required before arbitration can commence.
The arbitration will be conducted by a single arbitrator following the AAA's rules for commercial disputes, unless otherwise specified in the agreement. The location for arbitration proceedings is set in Bergen County, New Jersey, or the closest suitable AAA location if Bergen County lacks suitable facilities. The Federal Arbitration Act governs all matters relating to arbitration, except as expressly stated in the agreement.
The arbitration hearing must occur within 180 days of the arbitration demand. The arbitrator is required to provide written findings of fact and conclusions of law. For franchisees in Illinois, Illinois law governs the agreements, and while the agreement may provide for arbitration in a venue outside Illinois, any provision designating jurisdiction or venue outside the state is void according to the Illinois Franchise Disclosure Act.