According to the Belocal franchise agreement, what rules govern arbitration?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) The parties agree that, to the extent that any disputes cannot be resolved directly between Franchisee and Franchisor, and following compliance with the applicable mediation requirements set forth in Section 14.B. above, any dispute, controversy, or claim arising out of, in connection with, or relating to this Agreement, and the relationships created hereby; or the formation, interpretation, breach, termination, or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, must be resolved by arbitration. The arbitration must be administered in accordance with the Commercial Rules of the AAA. There shall be one arbitrator. The arbitrator must be experienced in franchising or franchise law and have no prior business or professional relationship with either party. All matters relating to arbitration shall be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.) ("FAA"). The parties intend and agree that any state laws attempting to prohibit arbitration or void out-ofstate forums for arbitration are preempted by the FAA and that arbitration shall be held as provided in this Section 14.C. The arbitrator must provide a reasoned award in writing. The award rendered by the arbitrator shall be final, and judgment may be entered thereon in any court having jurisdiction thereof.
- (2) The costs and expenses of arbitration paid to the AAA and to the arbitrator shall initially be paid equally by the two sides to the arbitration. All other arbitration-related expenses, including but not limited to attorneys' fees and travel expenses, shall be paid initially by the party which incurred such expense. Notwithstanding the foregoing, the arbitrator must award to the prevailing party the reasonable costs and fees, including attorneys' fees, incurred in the arbitration.
- (3) Arbitration shall be conducted in the city in which Franchisor maintains its principal business office at the time of the arbitration.
- (4) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ARBITRATION SHALL PROCEED SOLELY ON AN INDIVIDUAL BASIS WITHOUT THE RIGHT FOR ANY DISPUTES TO BE ARBITRATED ON A CLASS-ACTION BASIS OR ON ANY BASIS INVOLVING CLAIMS BROUGHT IN A PURPORTED REPRESENTATIVE CAPACITY ON BEHALF OF OTHERS.
DISPUTES MAY NOT BE JOINED OR CONSOLIDATED WITH ANY OTHER ARBITRATION UNLESS AGREED TO IN WRITING BY ALL PARTIES.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, any disputes that cannot be resolved directly between the franchisee and Belocal, after fulfilling mediation requirements, must be settled through arbitration. This arbitration will be managed according to the Commercial Rules of the American Arbitration Association (AAA).
The agreement specifies that there will be a single arbitrator who is experienced in franchising or franchise law and has no prior business or professional connections with either party. The Federal Arbitration Act (FAA) governs all aspects of the arbitration, superseding any state laws that might attempt to prohibit arbitration or void out-of-state arbitration forums. The arbitrator is required to provide a reasoned award in writing, which will be final and can be entered in any court with jurisdiction.
The costs of arbitration, including fees paid to the AAA and the arbitrator, are to be initially split equally between the parties. However, each party is initially responsible for their own additional expenses, such as attorney's fees and travel costs. Ultimately, the arbitrator is mandated to award the prevailing party the reasonable costs and fees, including attorney's fees, incurred during the arbitration. Arbitration proceedings will take place in the city where Belocal maintains its principal business office at the time of the arbitration. Furthermore, arbitration will proceed on an individual basis, explicitly prohibiting class-action lawsuits or representative claims unless all parties agree to join or consolidate disputes in writing.