Under what circumstances is the joinder of parties to an arbitration between Buona and a franchisee permitted?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Franchisor and Franchisee agree that arbitration will be conducted on an individual basis only, and not on a joint, collective or class-wide basis, and that an arbitration proceeding between Franchisor and its Affiliates, and Franchisee and its shareholders, officers, directors, members, managers, employees and agents, may not be consolidated or joined with any other arbitration proceeding between Franchisor and any other person or entity. 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 Franchisee. Further, neither Franchisor nor Franchisee shall attempt to consolidate or otherwise combine in any manner, an arbitration proceeding involving Franchisor and Franchisee with another arbitration of any kind, nor shall Franchisor or Franchisee attempt to certify a class or participate as a party in a class action against the other.
- (b) The foregoing notwithstanding, in the event Franchisee controls, is controlled by, or is in active concert with another franchisee of Franchisor, or there is a guarantor of some or all of Franchisee's obligations to Franchisor, then the joinder of those parties to any arbitration between Franchisor and Franchisee 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 Franchisee shall be permitted.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, generally, neither Buona nor the franchisee can participate in any arbitration with a third party against the other, or join with any third party in any arbitration involving Buona and the franchisee. Additionally, neither party can consolidate or combine an arbitration proceeding involving Buona and the franchisee with another arbitration of any kind, nor can they attempt to certify a class or participate as a party in a class action against the other. This means that disputes must be handled individually in arbitration, preventing franchisees from joining together to pursue collective claims against Buona.
However, there are exceptions to this rule. The joinder of parties is permitted if the franchisee controls, is controlled by, or is in active concert with another Buona franchisee. Joinder is also allowed if there is a guarantor of some or all of the franchisee's obligations to Buona. Furthermore, the joinder of an owner, director, officer, member, manager, partner, or other representative or agent of Buona or the franchisee is permitted. This allows for related parties who have a direct interest or involvement in the franchise to be included in the arbitration proceedings.
This clause ensures that arbitration remains a focused and manageable process, while also recognizing situations where the involvement of related parties is necessary or appropriate. For a prospective franchisee, this means understanding that arbitration will generally be an individual process, but there are specific circumstances where other parties may be joined, such as when there are multiple franchisees under common control or when a guarantor is involved. It is important to consider these conditions when evaluating the arbitration terms of the franchise agreement.