Does the Belocal franchise agreement allow for class-action 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 does not allow for class-action arbitration. The agreement specifies that arbitration will proceed solely on an individual basis. This means a franchisee cannot participate in a class-action lawsuit against Belocal, nor can they bring claims in a representative capacity on behalf of others. Each franchisee must pursue their disputes independently through arbitration.
This clause is intended to prevent franchisees from joining together to pursue large-scale claims against Belocal. It limits the company's exposure to potentially significant financial liabilities that could arise from class-action lawsuits. However, it also means that a franchisee bears the full cost and risk of pursuing arbitration individually, which may be a deterrent for smaller claims.
It is important for a prospective Belocal franchisee to understand this limitation. While individual arbitration is still an option, the inability to participate in a class action could be a disadvantage if multiple franchisees have similar grievances. This is a fairly standard practice in franchising, as franchisors often seek to avoid the complexities and potential costs associated with class-action litigation. Franchisees should consider the implications of this clause and whether it aligns with their risk tolerance and potential dispute resolution strategies.