What law governs all matters relating to arbitration under the Belocal franchise agreement?
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.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the Federal Arbitration Act (FAA) governs all matters relating to arbitration. Specifically, the FAA is codified as 9 U.S.C. §§ 1 et seq. The franchise agreement states that any state laws attempting to prohibit arbitration or void out-of-state forums for arbitration are preempted by the FAA.
This means that the arbitration process defined in the Belocal franchise agreement is subject to federal law, which generally favors the enforcement of arbitration agreements. Prospective franchisees should understand that this clause aims to ensure that arbitration is conducted according to a consistent legal standard, regardless of state-specific regulations that might otherwise impede or prohibit arbitration.
This clause also specifies that arbitration will be held as provided in Section 14.C of the franchise agreement. The arbitrator must provide a reasoned award in writing, and the award rendered by the arbitrator is final, with judgment potentially entered in any court having jurisdiction. This reinforces the binding nature of the arbitration and limits the avenues for appealing the arbitrator's decision.