Is the arbitration provision in the Baya Bar franchise agreement considered self-executing?

According to Baya Bar's 2024 Franchise Disclosure Document, the arbitration provision within the franchise agreement is self-executing. This means that if a dispute arises between Baya Bar and the developer, the arbitration process will automatically be initiated and will remain in effect even after the agreement expires or is terminated.

This self-executing nature implies that neither party needs to take additional steps to enforce the arbitration agreement; it is automatically enforceable. The document specifies that any arbitration will be conducted on an individual basis, not as part of a class-wide or multiple plaintiffs action. Furthermore, if either party fails to attend a properly-noticed arbitration proceeding, a default award may be issued against the non-attending party.

The arbitration hearings and proceedings will occur in Staten Island, New York, or at the American Arbitration Association's offices, unless Baya Bar elects to hold them in the county where the developer's principal place of business is located. The document also states that no punitive or exemplary damages will be awarded against either party in an arbitration proceeding.

This clause is designed to ensure disputes are resolved efficiently through arbitration, avoiding potentially lengthy and costly court battles. However, franchisees should be aware that they are waiving their right to participate in class action lawsuits and may be subject to default judgments if they fail to appear at arbitration proceedings.