Does the Better Blend franchise agreement require arbitration of disputes at a location remote from the franchisee's business site?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
The Franchise Agreement requires binding arbitration. The arbitration will occur in Cincinnati, Ohio, with the costs being borne equally by Franchisor and Franchisee. Prospective franchisees are encouraged to consult private legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code Section 20040.5, Code of Civil Procedure Section 1281, and the Federal Arbitration Act) to any provisions of a franchise agreement restricting venue to a forum outside the State of California.
Source: Item 23 — RECEIPTS (FDD pages 43–157)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, the franchise agreement mandates binding arbitration, with the arbitration proceedings to occur in Cincinnati, Ohio. The costs associated with arbitration are to be shared equally between Better Blend and the franchisee.
For prospective franchisees, this means that any disputes arising with Better Blend will need to be resolved through arbitration in Cincinnati, Ohio, regardless of where the franchisee's business is located. This could involve significant travel expenses and logistical challenges for franchisees located far from Cincinnati. Franchisees are also responsible for covering their portion of the arbitration costs, which could include legal fees, travel, and other related expenses.
The FDD includes addenda for certain states that address the fairness of arbitration clauses. For example, the North Dakota addendum states that franchise agreements that require arbitration at a location remote from the franchisee's business are considered unfair, unjust, or inequitable. The California addendum encourages prospective franchisees to seek legal counsel to determine the applicability of California and federal laws regarding venue restrictions to a forum outside of California.
Prospective franchisees should carefully consider the implications of the arbitration clause, especially if they are located far from Cincinnati. They may want to consult with an attorney to understand their rights and options, and to assess the potential costs and burdens of arbitrating disputes in a remote location. Franchisees should also be aware of any state-specific laws or regulations that may affect the enforceability of the arbitration clause.