What law governs arbitration proceedings between Buona and its developers?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.6 Governing Law/Consent to Jurisdiction.
All arbitration proceedings between Franchisor and Developer shall be governed by the Federal Arbitration Act ("FAA") and no procedural arbitration issues are to be resolved pursuant to any state statutes, regulations or common law.
Except to the extent governed by the FAA, the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C.
Section 1051, et seq.) or other federal law, this Agreement shall be interpreted and governed under the laws of the State of Illinois and any dispute between the parties shall be governed by and determined in accordance with the substantive laws of the State of Illinois, which laws shall prevail if there is any conflict of law.
Developer and Franchisor have negotiated regarding a forum in which to resolve any disputes which may arise between them and have agreed to select a forum in order to promote stability in their relationship.
Therefore, if a claim is asserted in any legal proceeding involving Developer and/or any affiliate of Developer and Franchisor, its Affiliates and their respective officers, directors, members, managers, and employees, the parties agree that the exclusive venue for disputes between them shall be
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the Federal Arbitration Act (FAA) governs all arbitration proceedings between Buona and its developers. The FDD explicitly states that no procedural arbitration issues will be resolved according to any state statutes, regulations, or common law. This means that the arbitration process will be handled under federal law, providing a consistent legal framework for resolving disputes.
This is significant for a prospective Buona franchisee because it establishes a clear legal standard for any potential arbitration. The FAA is generally designed to promote and enforce arbitration agreements, which can offer a quicker and more cost-effective alternative to traditional litigation. However, franchisees should be aware of the implications of federal arbitration, including potential limitations on discovery and appeal rights compared to state court proceedings.
Furthermore, the agreement specifies that the substantive laws of the State of Illinois will govern the interpretation of the franchise agreement and any disputes between the parties, except to the extent governed by the FAA, the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Section 1051, et seq.) or other federal law. This means that while the arbitration process is governed by federal law, the underlying legal issues will be decided based on Illinois state law, unless federal law applies. This blend of federal and state law aims to provide a stable and predictable legal environment for the franchise relationship.
Buona and its developers agree that arbitration will be conducted in Cook County, Illinois. This clause ensures that both parties have clarity regarding the location of arbitration proceedings, which can be an important consideration in terms of travel, legal representation, and familiarity with local rules and procedures.