Does the Buona franchise agreement allow a developer to commence arbitration with a third party against Buona?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Neither party shall commence any arbitration with a third party against the other, or join with any third party in any arbitration involving Franchisor and Developer.
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, the developer is restricted from starting arbitration with a third party against Buona. The document states that neither party, which includes both Buona and the developer, is allowed to start any arbitration proceedings with a third party against the other party. Also, the developer cannot join with a third party in any arbitration involving Buona and the developer.
This clause ensures that arbitration remains strictly between Buona and the developer, preventing complications that could arise from involving outside parties. This limitation is intended to keep the resolution process focused and manageable.
However, there are exceptions. If the developer is controlled by, controls, or is working in conjunction with another Buona developer, or if there is a guarantor of the developer’s obligations to Buona, then those parties can be joined in an arbitration between Buona and the developer. Additionally, owners, directors, officers, members, managers, partners, or other representatives or agents of either Buona or the developer can be included in the arbitration proceedings.