Are procedural arbitration issues between Buona and its developers resolved pursuant to state statutes, regulations, or common law?
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, all arbitration proceedings between Buona and its developers are governed by the Federal Arbitration Act (FAA). The document explicitly states that no procedural arbitration issues are to be resolved pursuant to any state statutes, regulations, or common law. This means that the FAA will be the controlling authority in determining how arbitration is conducted.
This clause has significant implications for prospective Buona developers. It ensures a uniform and consistent approach to arbitration across all franchise agreements, regardless of the state in which the franchise is located. The FAA is generally considered to provide a stable and predictable framework for arbitration, which can be beneficial to both the franchisor and the franchisee. However, franchisees should become familiar with the FAA to understand their rights and obligations in the event of a dispute leading to arbitration.
While the FAA governs the procedural aspects of arbitration, the substantive laws of the State of Illinois 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 Illinois law will be used to determine the merits of any claims made in arbitration, providing a legal framework for resolving disagreements. This also means that any legal proceedings involving Buona and its developers will take place in the state and federal courts of Cook County, Illinois or in arbitration in Cook County, Illinois.