According to the Buona franchise agreement, what arbitration rules will be used?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 24.2 Arbitration.
Except for controversies, disputes or claims related to or based on Franchisee's use of the Marks or Confidential Information, Franchisee's compliance with its noncompetition obligations and any rights Franchisor may have to possession of the premises of the Buona Business under any sublease, lease or collateral assignments, all controversies, disputes or claims between Franchisor, its affiliates, and their respective owners, officers, directors, agents, employees and attorneys, and Franchisee (its affiliates and owners and guarantors, if applicable), arising out of or related to this Agreement or any other agreement between the parties; the parties' rights and obligations under this Agreement; Franchisor's relationship with Franchisee or the obligations by and between the parties; or the validity of this Agreement or any other agreement between Franchisor and Franchisee or any provision of such agreements, will be submitted to binding Arbitration administered by the American Arbitration Association ("AAA") in accordance with the AAA's then-current Commercial Arbitration Rules.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, most disputes between Buona and its franchisees will be settled through binding arbitration. The arbitration will be administered by the American Arbitration Association (AAA). The AAA's then-current Commercial Arbitration Rules will be used. This means that the specific procedures and guidelines set forth by the AAA for commercial disputes will govern how the arbitration is conducted.
However, there are exceptions to this arbitration requirement. Disputes related to a franchisee's use of Buona's trademarks or confidential information, compliance with non-competition obligations, or Buona's rights to possess the premises of the Buona business are not subject to arbitration. These types of disputes may be resolved through litigation in court.
This arbitration clause is fairly standard in franchise agreements. It aims to provide a more efficient and cost-effective way to resolve disputes compared to traditional litigation. However, franchisees should be aware of the specific rules of the AAA and understand their rights and obligations in the arbitration process. Franchisees should also note the exceptions to the arbitration requirement, as these could lead to court proceedings in certain situations.