Does the Benihana franchise agreement allow for class-wide arbitration proceedings?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
Except as otherwise provided, each party shall bear its own attorneys' fees, expert witness fees, and other court or arbitration costs incurred in connection with any legal action or arbitration between BNC and Franchisee.
- 15.4 Franchisee and BNC agree that any arbitration will be conducted only on an individual, and not a class-wide, basis.
An arbitration proceeding between Franchisee and BNC will not be consolidated with any other arbitration proceeding involving BNC and any other person or entity.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the franchise agreement does not allow for class-wide arbitration. Section 15.4 of Item 22 explicitly states that any arbitration between Benihana and a franchisee will be conducted on an individual basis, and not on a class-wide basis. Furthermore, the agreement specifies that an arbitration proceeding between a franchisee and Benihana will not be consolidated with any other arbitration proceeding involving Benihana and any other person or entity.
This means that a franchisee cannot participate in a class action arbitration against Benihana, nor can they consolidate their arbitration with other franchisees. Each franchisee must pursue their claims individually. This clause is meant to prevent franchisees from joining together to pursue a single arbitration case against Benihana.
This type of clause is relatively common in franchise agreements. It is designed to protect the franchisor from large, coordinated legal actions. However, it can put franchisees at a disadvantage, as they may have fewer resources to pursue individual claims compared to a class action. Prospective franchisees should consider this when evaluating the franchise agreement and consult with an attorney to understand the implications of this clause.