Under the Belocal franchise agreement, what rules of the AAA govern the arbitration process?
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 will be settled through arbitration. This arbitration process will be administered following the Commercial Rules of the American Arbitration Association (AAA). The arbitration will involve a single arbitrator who has experience in franchising or franchise law and no prior business or professional relationship with either party.
The arbitration process is governed by the Federal Arbitration Act (FAA), which preempts any state laws that attempt to prohibit arbitration or void out-of-state forums for arbitration. The arbitrator is required to provide a reasoned award in writing, and this award is considered final, with judgment potentially entered in any court with jurisdiction.
The costs and expenses of arbitration paid to the AAA and the arbitrator are initially split equally between both parties. Other arbitration-related expenses, such as attorneys' fees and travel expenses, are initially paid by the party that incurs them. However, the arbitrator is mandated to award the prevailing party the reasonable costs and fees, including attorneys' fees, incurred during the arbitration. The arbitration will take place in the city where Belocal maintains its principal business office at the time of the arbitration, and it will proceed solely on an individual basis, without the right to class-action arbitration or representative claims, unless all parties agree in writing to join or consolidate disputes.