Under the Bft franchise agreement, what law governs matters relating to arbitration?
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.
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 Federal Arbitration Act (9 U.S.C. §§ 1 et seq.) governs all matters relating to arbitration. The FDD specifies that the provisions of the Federal Arbitration Act will supersede any conflicting state laws regarding arbitration.
This means that any disputes between Bft and a franchisee that proceed to arbitration will be subject to the rules and procedures established by the Federal Arbitration Act, regardless of any conflicting state laws. This is a common practice in franchising to ensure uniformity and consistency in dispute resolution.
However, the franchise agreement also states that, 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, the agreement will be governed by the internal laws of the State of California, without regard to its conflicts of laws rules. The exception is that provisions regarding competitive activities shall be interpreted and enforced in accordance with the laws of the state in which the Development Area is located.
Prospective franchisees should be aware of the implications of these governing law provisions, particularly concerning arbitration. They should consult with legal counsel to understand their rights and obligations under both the Federal Arbitration Act and the laws of California, as well as the laws of the state in which their Bft franchise will operate, to the extent those laws govern competitive activities.