What rules govern the arbitration process for Bft franchise disputes?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Governing Law. Franchisor and Developer agree that all matters relating to arbitration will be governed by the substantive and procedural provisions of the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.), which they acknowledge and agree will supersede any conflicting provisions of any state's laws relating to arbitration. Except to the extent governed by the Federal Arbitration Act, the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sections 1051 et seq.), or other applicable federal laws, this Agreement and any other agreement between Franchisor (or its parents, affiliates, and subsidiaries) and
Developer (or its parents, affiliates, and subsidiaries, if applicable), and the rights granted and relationships created thereunder, shall be governed by the internal laws of the State of California, without regard to its conflicts of laws rules, except that the provisions regarding competitive activities shall be interpreted and enforced in accordance with the laws of the state in which the Development Area is located. The Parties further acknowledge and agree that the adoption of California law in this Section is not intended to circumvent or, in any manner, satisfy any jurisdictional requirements contained in any such laws that are expressly and specifically directed to the offer or sale of franchises or the relationships between franchisors and franchisees.
- B. Internal Dispute Resolution.The Parties each agree that, except as set forth in Section 12.E below, before it (or any of its parents, affiliates, or subsidiaries, or their respective owners, officers, directors, employees, or representatives) initiates an arbitration or litigation against the other Party (or any of the other Party's parents, affiliates, or subsidiaries, or their respective owners, officers, directors, employees or representatives), the Party initiating arbitration or litigation will provide the other Party with written notice of the underlying claim or dispute specifying, in detail, the precise nature and grounds of the claim or dispute.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to the 2025 Bft Franchise Disclosure Document, the arbitration process is governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.). This act takes precedence over any conflicting state laws regarding arbitration. In addition to the Federal Arbitration Act, the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sections 1051 et seq.) or other applicable federal laws may also govern the arbitration process. The agreement itself and the relationships it creates are governed by California law, excluding its conflicts of laws rules, except that the provisions regarding competitive activities shall be interpreted and enforced in accordance with the laws of the state in which the Development Area is located. However, the adoption of California law does not circumvent any jurisdictional requirements in laws specifically directed to franchise offers, sales, or franchisor-franchisee relationships.
Before initiating arbitration or litigation against Bft, a franchisee must provide written notice detailing the precise nature and grounds of the claim or dispute. This notice must be given before the franchisee (or its affiliates) starts any arbitration or litigation against Bft (or its affiliates). This requirement for internal dispute resolution aims to provide an opportunity for the parties to resolve the issue before resorting to formal legal proceedings.
For franchisees operating in Maryland, there are specific stipulations. A rider to the franchise agreement notes that franchisees may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law, and Maryland law will apply to these claims. This provision ensures that franchisees in Maryland retain their rights under Maryland franchise law, even within the broader framework of the franchise agreement. Similarly, for franchises purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.