Does the Bft franchise agreement's consent to jurisdiction override the obligation to submit to binding arbitration?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
16.6 Consent to Jurisdiction. Subject to the obligation to submit to binding arbitration under Section 16.4 above, Franchisor and Franchisee agree that all controversies, disputes, or claims between them or any Franchisor Parties and Franchisee Parties arising out of or related to this Agreement or any other agreement between a Franchisor Party and a Franchisee Party or their relationships with each other must be commenced exclusively in state or federal court closest to Franchisor's (or its successor's or assign's, as applicable) then-current principal place of business (currently, Irvine, California), and the Parties irrevocably consent to the jurisdiction of those courts and waive any objection to either the jurisdiction of or venue in those courts.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to the 2025 Bft Franchise Disclosure Document, the consent to jurisdiction outlined in the franchise agreement is subject to the obligation to submit to binding arbitration. This means that while Bft franchisees agree to the jurisdiction of specific courts, this agreement is secondary to the requirement to first engage in binding arbitration for dispute resolution.
Specifically, the franchise agreement states that any controversies, disputes, or claims between the franchisee and Bft must be commenced exclusively in state or federal court closest to Bft's principal place of business (currently Irvine, California). Both parties irrevocably consent to the jurisdiction of those courts and waive any objection to the jurisdiction or venue. However, this consent is explicitly "subject to the obligation to submit to binding arbitration" as detailed in another section of the agreement.
In practical terms, this means that if a dispute arises, a Bft franchisee must first attempt to resolve it through binding arbitration. Only if the arbitration process is not applicable or does not fully resolve the issue can the franchisee then pursue legal action in the specified courts. This clause ensures that arbitration is the primary method of dispute resolution, potentially saving both parties time and money compared to traditional litigation.