Can the validity and scope of the arbitration provision under Section 12 be determined by a court for Bft?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
orce and effect subsequent to and notwithstanding the expiration or termination of this Agreement. Any provisions of this Agreement below that pertain to judicial proceedings shall be subject to the agreement to arbitrate contained in this Section.
In the event any portion of this Section is deemed unenforceable, the remainder of this agreement to arbitrate will be enforceable.
The parties to any mediation or arbitration will execute an appropriate confidentiality agreement, excepting only such disclosures and filings as are required by law.
E. Other Proceedings (Right to Injunctive Relief). Nothing in this Agreement, including the provisions of Sections 12.B through 12.D, bars a Party's right to seek and obtain in any court of competent jurisdiction injunctive or other equitable relief against actual or threatened conduct that it believes is likely to cause loss or damage to its trademarks (including the Marks), its proprietary
information, or its systems (including the System), in each case, under customary equity rules, including applicable rules for obtaining restraining orders and injunctions.
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, while the agreement emphasizes arbitration for dispute resolution, there are certain circumstances where court intervention is possible. Specifically, Section 12.E states that nothing within the agreement bars a party's right to seek injunctive or other equitable relief in a court of competent jurisdiction to protect its trademarks, proprietary information, or systems. This means that Bft or the franchisee can go to court to prevent actions that could cause immediate and irreparable harm related to these assets.
Furthermore, Section 12.F indicates that controversies, disputes, or claims must be commenced exclusively in state or federal court closest to Bft's principal place of business (Irvine, California), and the parties consent to the jurisdiction of those courts. This suggests that while arbitration is preferred, court actions are contemplated and agreed upon for certain types of disputes.
Additionally, the enforceability of certain provisions, such as those relating to jury trial waivers or punitive damages, may be subject to state franchise laws. For example, the FDD includes riders for Maryland, North Dakota, and Rhode Island that modify the standard agreement to comply with those states' franchise laws. These modifications may affect the scope and enforceability of the arbitration provisions, and a court may need to determine the validity of these provisions in specific cases.
Therefore, while Bft aims to resolve most disputes through arbitration, the ability to seek injunctive relief, the consent to jurisdiction in specific courts, and the potential impact of state franchise laws mean that a court could indeed determine the validity and scope of the arbitration provision under certain circumstances.