Where will arbitration proceedings be conducted for disputes related to the Big Apple Bagels franchise agreement?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
k. Time is of the Essence. Time is of the essence of this Agreement.
l. Mandatory and Binding Arbitration.
- i. All disputes, controversies or claims arising out of or relating to this Agreement, except for issues relating to the ownership, validity or registration of any name or Mark licensed hereunder, shall be submitted for arbitration to the American Arbitration Association on demand of either party. The demand shall be submitted to, and the arbitration proceedings shall be conducted in the major city nearest where Franchisor's principal business address is then located, and shall be heard by one arbitrator in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association. All matters within the scope of the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.) shall be governed by it. This provision shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.
- ii. The arbitrator shall have the right to award or include in his award any relief which he deems proper in the circumstances, including, without limitation, money damages (with interest on unpaid amounts from the date due), specific performance, injunctive relief and attorneys' fees and costs, in accordance with Paragraph 18.d., provided that the arbitrator shall not have the authority to award exemplary or punitive damages. The award and decision of the arbitrator shall be conclusive and binding upon all parties hereto and judgment upon the award may be entered in any court of competent jurisdiction. Each party waives any right to contest the validity or enforceability of such award. The parties agree to be bound by the provisions of any limitation on the period of time by which claims must be brought. The parties further agree that, in connection with any such arbitration proceeding, each shall submit or file any claim which would constitute a compulsory counterclaim (as defined by rule 13 of the Federal Rules of Civil Procedure) within the same proceeding as the claim to which it relates. Any such claim which is not submitted or filed in such proceeding shall be barred.
- iii. Franchisor and Franchisee agree that arbitration shall be conducted on an individual, not a class-wide, basis, that only Franchisor (and its affiliates and their respective owners, officers, directors, agents and employees, as applicable) and Franchisee (and its affiliates and their respective owners, officers and directors, as applicable) may be the parties to any arbitration proceeding described in this Section, and that no such arbitration proceeding shall be consolidated with any other arbitration proceeding
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, any disputes arising from the franchise agreement, except those concerning the ownership, validity, or registration of licensed names or marks, will be submitted for arbitration to the American Arbitration Association. The arbitration proceedings will take place in the major city nearest to where Big Apple Bagels' principal business address is located at that time. A single arbitrator will conduct the hearing in accordance with the American Arbitration Association's then-current Commercial Arbitration Rules.
This arbitration clause is significant for prospective franchisees because it mandates that most disputes be resolved through arbitration rather than through the court system. Arbitration is often considered a faster and less expensive alternative to litigation, but it also limits the franchisee's ability to appeal decisions. The arbitrator has the authority to award various forms of relief, including money damages, specific performance, injunctive relief, and attorneys' fees and costs, but cannot award exemplary or punitive damages.
The franchisee also waives any right to contest the validity or enforceability of the arbitrator's award. Furthermore, any claim that would be considered a compulsory counterclaim must be submitted during the arbitration proceeding, or it will be barred. This means a Big Apple Bagels franchisee needs to be comprehensive in presenting their case during arbitration.
It is important to note that the arbitration will be conducted on an individual basis, not as a class action. This prevents franchisees from joining together to pursue claims collectively against Big Apple Bagels. Franchisees should consider the implications of these provisions and seek legal counsel to fully understand their rights and obligations under the franchise agreement.