Does the Bft franchisor or franchisee determine the validity and scope of the arbitration provision?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
all controversies, disputes, or claims between Franchisor, or any of its parents, affiliates, and subsidiaries, and its and their respective owners, officers, directors, agents, and employees (the "Franchisor Parties"), on the one hand, and Franchisee, or any of its parents, affiliates, and subsidiaries, and its and their respective owners, guarantors, officers, directors, agents, and employees (the "Franchisee Parties") on the other hand, arising out of or related to: (1) this Agreement or any other agreement between any of the Franchisor Parties and Franchisee Parties; (2) the relationships between any Franchisor Parties and Franchisee Parties; (3) the scope or validity of this Agreement or any other agreement referenced in clause (1) above or any provision of any of such agreements (including the validity and scope of the arbitration provision under this Section, which Franchisor and Franchisee acknowledges is to be determined by an arbitrator, not a court); or (4) any System Standard, must be submitted for binding arbitration, on demand of either Party, to JAMS.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the validity and scope of the arbitration provision is determined by an arbitrator, not a court. This is explicitly acknowledged by both Bft and the franchisee.
The FDD outlines that any disputes arising from the franchise agreement, relationships between parties, or the system standards must be submitted for binding arbitration if mediation or informal dispute resolution fails. Either Bft or the franchisee can demand this arbitration.
This means that a neutral third party, the arbitrator, will decide if the arbitration clause itself is applicable and what issues it covers. This prevents either Bft or the franchisee from unilaterally dictating the terms of dispute resolution, ensuring a more balanced approach. Prospective franchisees should understand that they are agreeing to have an arbitrator, rather than a judge, decide on the scope and validity of this critical clause.