What controversies, disputes or claims related to Buona are excluded from arbitration?
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 Franchised 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 thencurrent Commercial Arbitration Rules. The arbitration hearing shall take place in Cook County, Illinois, before a single arbitrator. Any party who fails or refuses to submit any dispute to binding arbitration following a lawful demand by the opposing party shall bear all costs and expenses incurred by the opposing party in compelling arbitration. The parties shall have thirty days after the service of a Statement of Claim and demand for arbitration to agree on a single arbitrator. If the parties cannot
agree on a single arbitrator, the matter will be filed with and administered by the AAA, or if AAA is not available, any comparable arbitration body.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, certain disputes are excluded from mandatory arbitration. Specifically, controversies, disputes, or claims related to the franchisee's use of Buona's trademarks or confidential information, as well as the franchisee's compliance with non-competition obligations, are not subject to mandatory arbitration. Additionally, any rights Buona may have to possession of the premises of the Franchised Business under any sublease, lease or collateral assignments are excluded from arbitration.
This means that Buona retains the right to pursue these specific types of claims against a franchisee in court, rather than being required to resolve them through arbitration. For a prospective franchisee, this is an important consideration because it limits the scope of disputes that must be handled through arbitration, which is generally considered a more streamlined and cost-effective process than litigation. However, it also means that Buona can choose to pursue legal action in court for these specific issues, which could potentially be more costly and time-consuming for the franchisee.
It is fairly common in franchise agreements to exclude certain types of disputes from arbitration, particularly those involving intellectual property or breaches of non-competition agreements, as these are often considered critical to protecting the franchisor's brand and business interests. Franchisees should carefully review the arbitration clause in the Franchise Agreement to understand which types of disputes are subject to arbitration and which are not, and to assess the potential implications for their business.