Is a Buona developer permitted to participate as a party in a class action against the Franchisor?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Further, neither Franchisor nor Developer shall attempt to consolidate or otherwise combine in any manner, an arbitration proceeding involving Franchisor and Developer with another arbitration of any kind, nor shall Franchisor or Developer attempt to certify a class or participate as a party in a class action against the other.
- (b) The foregoing notwithstanding, in the event Developer controls, is controlled by, or is in active concert with another developer of Franchisor, or there is a guarantor of some or all of Developer's obligations to Franchisor, then the joinder of those parties to any arbitration between Franchisor and Developer shall be permitted, and in all events, the joinder of an owner, director, officer, member, manager, partner or other representative or agent of Franchisor or Developer shall be permitted.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, both Buona and the developer are prohibited from attempting to certify a class or participate as a party in a class action against each other. This restriction is in place to ensure that any disputes are handled on an individual basis through arbitration, rather than through class action lawsuits. This clause aims to streamline dispute resolution and avoid the complexities and costs associated with class action litigation.
However, there is an exception to this rule. If the developer is controlled by, controls, or is in active concert with another Buona developer, or if there is a guarantor of the developer's obligations to Buona, the joinder of those parties to any arbitration between Buona and the developer is permitted. Additionally, the joinder of an owner, director, officer, member, manager, partner, or other representative or agent of either Buona or the developer is allowed.
This provision ensures that while class actions are generally prohibited, related parties with significant connections or shared interests can be joined in arbitration proceedings. This exception acknowledges the potential for interconnectedness among developers and related individuals, allowing for a more comprehensive resolution of disputes when such relationships exist.