What law governs all arbitration proceedings between Buona and its developers?

According to Buona's 2025 Franchise Disclosure Document, the Federal Arbitration Act (FAA) governs all arbitration proceedings between Buona and its developers. The FDD specifies that no procedural arbitration issues will be resolved using state statutes, regulations, or common law. This means that the process and rules for conducting the arbitration will be determined by the FAA, a federal law designed to promote and enforce arbitration agreements.

This clause is significant for prospective Buona franchisees because it dictates the legal framework for resolving disputes with the franchisor through arbitration. By referencing the FAA, Buona aims to ensure a consistent and predictable arbitration process across different states, avoiding potential conflicts or variations that could arise from state-specific laws.

However, the agreement also states that, 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, the 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. This means that while the FAA governs the arbitration process itself, the substantive issues in the dispute may be decided based on Illinois law or other applicable federal laws like trademark regulations.

It is important for a potential Buona franchisee to understand the implications of this governing law provision, as it affects how disputes will be resolved and what laws will be applied. Franchisees should consult with legal counsel to fully understand their rights and obligations under the franchise agreement, particularly concerning dispute resolution and the applicable laws.