What discovery limitations are placed on arbitration proceedings for Bhc franchise disputes?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) Either party may present briefs and affidavits of witnesses who are unable to attend hearings.
A limited amount of discovery is permitted within the discretion of the arbitrator (including affidavits, interrogatories, and depositions).
The arbitrator will have the right to award or include in the award any relief that the arbitrator deems proper in the circumstances, including money damages (with interest on unpaid amounts from the date due), specific performance and injunctive relief, provided that the arbitrator will not have the right to declare any Mark generic or otherwise invalid or to award punitive damages.
If either party fails to appear or participate in the arbitration proceeding, the other party will be entitled to a default judgment award.
The arbitration award will be final and binding on the parties, and judgment on the award may be entered in any federal or state court having jurisdiction.
- (d) TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL CLAIMS BROUGHT UNDER THIS AGREEMENT WILL BE BROUGHT IN AN INDIVIDUAL CAPACITY.
THIS AGREEMENT MAY NOT BE CONSTRUED TO ALLOW OR PERMIT THE CONSOLIDATION OR JOINDER OF OTHER CLAIMS OR CONTROVERSIES INVOLVING ANY OTHER FRANCHISEES OR PERMIT SUCH CLAIMS OR CONTROVERSIES TO PROCEED AS A CLASS ACTION, CLASS ARBITRATION, COLLECTIVE ACTION, OR ANY SIMILAR REPRESENTATIVE ACTION.
NO ARBITRATOR WILL HAVE THE AUTHORITY UNDER THIS AGREEMENT TO ORDER ANY SUCH CLASS OR REPRESENTATIVE ACTION.
BY SIGNING BELOW, FRANCHISEE EXPRESSLY AGREES TO WAIVE ALL SUBSTANTIVE AND PROCEDURAL RIGHTS THAT IT MAY HAVE TO BRING AN ACTION ON A CLASS, COLLECTIVE, REPRESENTATIVE OR OTHER SIMILAR BASIS.
- (e) TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE PARTIES WAIVE ALL RIGHTS THEY MAY HAVE TO SEEK PUNITIVE DAMAGES FROM ONE ANOTHER.
ACCORDINGLY, THE ARBITRATOR WILL HAVE NO POWER TO ASSESS PUNITIVE DAMAGES AGAINST EITHER PARTY.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, there are limitations to discovery in arbitration. The arbitrator has discretion to allow a limited amount of discovery, including affidavits, interrogatories, and depositions. Parties can present briefs and affidavits from witnesses who cannot attend hearings.
Notably, all claims must be brought in an individual capacity, meaning franchisees waive the right to consolidate claims with other franchisees or participate in class actions, class arbitrations, or similar representative actions. The arbitrator lacks the authority to order any class or representative action. Franchisees expressly agree to waive their rights to bring actions on a class, collective, representative, or similar basis.
Furthermore, the arbitrator cannot award punitive damages. This limitation on discovery and the waiver of class action rights could impact a franchisee's ability to gather comprehensive evidence and seek certain types of remedies in a dispute with Bhc. Prospective franchisees should carefully consider these limitations and their potential impact on their legal rights.
These limitations are relatively common in franchise agreements, as franchisors often seek to streamline dispute resolution and avoid costly class action lawsuits. However, franchisees should be aware of the trade-offs involved and seek legal counsel to understand their rights and obligations under the franchise agreement.