What law governs arbitration proceedings between Buona and its franchisees?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
All arbitration proceedings between Franchisor and Franchisee 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.
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 franchisees. The document specifies that no procedural arbitration issues are to be resolved according to any state statutes, regulations, or common law. This means that the arbitration process will be handled at the federal level, providing a consistent legal framework regardless of the franchisee's location.
This clause is significant for prospective franchisees because it establishes a clear legal standard for resolving disputes with Buona through arbitration. The FAA is generally favored for its efficiency and limited scope of judicial review, which can lead to quicker and more cost-effective resolutions compared to state-level proceedings. However, franchisees should be aware that the FAA may preempt certain state laws that could be more favorable to their position in a dispute.
Furthermore, the agreement specifies that the substantive laws of the State of Illinois will govern the interpretation of the franchise agreement, except where the FAA or federal law applies. This means that while the arbitration process is governed by federal law, the underlying contractual issues will be decided based on Illinois law. Franchisees should consider the implications of both the FAA and Illinois law when evaluating the franchise agreement and potential dispute resolution processes.
It is important for potential Buona franchisees to seek legal counsel to fully understand the implications of these governing law and arbitration provisions. Understanding the interplay between federal and state laws in dispute resolution can help franchisees make informed decisions and protect their interests throughout the franchise relationship.