Does the Belocal franchise agreement allow for claims to be brought in a representative capacity on behalf of others in arbitration?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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, the franchise agreement stipulates that arbitration will proceed solely on an individual basis. This means a franchisee cannot participate in class-action lawsuits or bring claims in a representative capacity on behalf of others. This requirement is in place to the fullest extent permitted by applicable law.
This clause prevents franchisees from consolidating their disputes with Belocal into a single arbitration proceeding unless all parties agree in writing. This ensures that each dispute is handled individually, potentially increasing the cost and complexity for franchisees who might otherwise benefit from joining forces with other franchisees facing similar issues.
This type of clause is common in franchise agreements as it protects the franchisor from large, consolidated claims. However, it may put franchisees at a disadvantage, as they must bear the full cost of arbitration individually, which can be a significant financial burden. Prospective franchisees should carefully consider this provision and its potential impact on their ability to resolve disputes with Belocal.