Does the choice of forum for Brain Balance franchise disputes depend on any conditions?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
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| Provision | Section in Franchise Agreement (or Satellite Franchise Agreement, if different) | Summary | |
|---|---|---|---|
| u. | Dispute Resolution by Arbitration or Mediation | 20 | Subject to applicable state law, except for certain claims, all disputes must be arbitrated before the American Arbitration Association located in Wilmington |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 54–61)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, the choice of forum for resolving disputes is subject to certain conditions. For disputes arising under the Franchise Agreement, arbitration will occur before the American Arbitration Association in Wilmington, Delaware. However, this is "subject to applicable state law", which means that state laws may override this provision.
Specifically, the FDD indicates that litigation must occur in a court located in New Castle County in the State of Delaware. This means that if a Brain Balance franchisee pursues litigation against the franchisor, they must do so in Delaware, regardless of where the franchise is located. This could increase costs for franchisees who do not reside in Delaware, as they would need to travel for court proceedings.
The Application License Agreement also contains a choice of forum clause. Subject to applicable state law, arbitration under the Federal Arbitration Act at the American Arbitration Association in San Francisco, California. The Application License Agreement will be interpreted and construed in accordance with the laws of the State of California, except for its conflict-of-law rules.
It is important for a prospective Brain Balance franchisee to understand these conditions and how they might affect dispute resolution. Franchisees should consult with a legal professional to fully understand the implications of these clauses, especially regarding the laws of their own state and how they interact with the franchise agreement.