How are disputes between parties arising out of the Brain Balance agreement resolved?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
Governing Law; Jurisdiction. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the conflicts of
laws rules thereof. Except as provided in Section 19(b) below, any and all disputes between the parties arising out of this Agreement, and any claim by either party that cannot be amicably settled (including tort as well as contract claims, claims based upon any Federal, state, or local statute, law, order, ordinance, or regulations, and claims arising from any relationship prior to, at the time of entering, during the term of, or upon or after expiration or termination of this Agreement), shall be determined solely and exclusively by arbitration under the Federal Arbitration Act, as amended, and in accordance with the rules then obtaining of the American Arbitration Association or any successor in Wilmington, Delaware, unless the parties otherwise agree in writing. The parties hereto hereby consent to personal jurisdiction in accordance with the foregoing provisions and hereby waive all objections to personal jurisdiction or venue for the purpose of carrying out the purposes of this Paragraph 19. The arbitrator(s) may not under any circumstance: (i) stay the effectiveness of any pending termination; (ii) assess punitive, speculative, or exemplary damages; or (iii) make any award which extends, modifies, or suspends any lawful term of this Agreement or any reasonable standard of business performance set by Licensor in good faith. The arbitrator(s) shall be limited to the issues in dispute between the Licensor and Licensee and a dispute between any other Licensee and the Licensor shall not be considered in the same arbitration proceeding or by the same arbitrator(s). The parties shall each be
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to the 2025 Brain Balance Franchise Disclosure Document, disputes between Brain Balance and a franchisee are generally resolved through arbitration under the Federal Arbitration Act. This process involves an arbitrator making a binding decision to resolve the issue. The arbitration takes place in Wilmington, Delaware, unless both parties agree to a different location in writing. Both Brain Balance and the franchisee consent to personal jurisdiction within this framework and waive objections to jurisdiction or venue. Each party is responsible for covering their own expenses, including fees for attorneys, accountants, and the arbitrator.
However, there are exceptions to this arbitration agreement. Brain Balance retains the right to seek immediate court orders to prevent a franchisee from defaulting on the agreement or breaching its terms. This is especially relevant if a franchisee's actions could cause significant damage to other Brain Balance centers or the company's overall business. In such cases, Brain Balance can pursue legal injunctions to stop the franchisee's actions, even if the franchise agreement has been terminated. This ensures Brain Balance can protect its brand and network of franchisees.
Additionally, the arbitrator's powers are limited. They cannot halt a pending termination, award punitive or speculative damages, or change any lawful term of the agreement or performance standards set by Brain Balance. The arbitration is restricted to the specific dispute between the franchisee and Brain Balance; disputes involving other franchisees will not be considered in the same proceeding. If Brain Balance initiates legal action to recover amounts owed by a franchisee, the franchisee waives the right to file a counterclaim or request a jury trial. The franchisee is also responsible for reimbursing Brain Balance for all costs associated with collecting unpaid amounts, including attorney's fees.
These stipulations are typical in franchise agreements, as they aim to provide a structured dispute resolution process while also protecting the franchisor's brand and business interests. Prospective Brain Balance franchisees should carefully consider these terms and understand the implications of arbitration and the franchisor's right to seek injunctive relief in certain situations.