Under what conditions is mandatory binding arbitration required for Bft disputes?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
n filing fee deadlines shall be tolled while the Parties engage in the internal dispute resolution process described in this Section.
- 16.3 Mediation. Except as provided in Section 16.5 below, the Parties agree to submit any claim or dispute that they are unable to resolve informally, as described in Section 16.2 above, to mediation to be conducted by JAMS using its then-current mediation rules and procedures (see www.jamsadr.com/mediation) and to take place at Franchisor's or, as applicable, Franchisor's successor's or assign's, then-current principal place of business (currently, Irvine, California), or via a videoconferencing platform, if both Parties agree. Each Party will bear its own costs in participating in the
mediation, and Franchisor and Franchisee will share JAMS' and the mediator's fees and costs equally. Neither Party will be required to mediate for more than one (1) day.
16.4 Mandatory Binding Arbitration. If Franchisor waives the obligation to mediate (as described in Section 16.3) or the informal dispute processes described in Sections 16.2 and 16.3 do not resolve the claim or dispute to the Parties' satisfaction, 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. If any Party initiates arbitration or files any counterclaim, it must submit a personally-signed verification therewith. The arbitration proceedings will be conducted by one mutually acceptable arbitrator and, except as this Section otherwise provides, according to JAMS' thencurrent Comprehensive Arbitration Rules & Procedures (see www.jamsadr.com/rules-comprehensivearbitration/) or, if applicable, then-current Mass Arbitration Procedures & Guidelines (see https://www.jamsadr.com/mass-arbitration-procedures). If the Parties are unable to agree on an arbitrator, an arbitrator having at least five (5) years' experience in the areas involved will be appointed by JAMS.
All proceedings will be conducted at a suitable location chosen by the arbitrator that is within 50 miles of Franchisor's (or its successor's or assign's, as applicable) then-current principal place of business (currently, Irvine, California), or via a videoconferencing platform, if both Parties agree. All matters relating to arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.).
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, mandatory binding arbitration is required for all controversies, disputes, or claims between Bft (including its parents, affiliates, subsidiaries, owners, officers, directors, agents, and employees) and the franchisee (including its parents, affiliates, subsidiaries, owners, guarantors, officers, directors, agents, and employees). This applies if informal dispute processes do not resolve the claim to the parties' satisfaction or if Bft waives the obligation to mediate.
The disputes subject to arbitration include those arising out of or related to the franchise agreement or any other agreement between Bft and the franchisee, the relationships between Bft and the franchisee, the scope or validity of the agreement, or any System Standard. Either party can demand arbitration, which will be conducted by JAMS (Judicial Arbitration and Mediation Services) using a mutually acceptable arbitrator. If the parties cannot agree on an arbitrator, JAMS will appoint one with at least five years of experience in the relevant areas.
The arbitration proceedings will take place within 50 miles of Bft's principal place of business (currently Irvine, California) or via videoconference if both parties agree. The Federal Arbitration Act governs all matters relating to arbitration. The arbitrator's decision is final and binding, and judgment upon the award may be entered in any court of competent jurisdiction. However, Bft retains the right to seek injunctive or other equitable relief in court against conduct that threatens its trademarks, proprietary information, or systems.
This mandatory binding arbitration clause means that franchisees waive their right to sue Bft in court and instead must resolve disputes through arbitration, which may be less expensive and time-consuming than litigation. However, the arbitrator cannot award punitive or exemplary damages against any party and cannot declare Bft's trademarks invalid. Franchisees should be aware of these limitations and consider the implications of agreeing to binding arbitration before investing in a Bft franchise.