Under what circumstances is the joinder of other parties permitted in arbitration between Buona and a franchisee?
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 and directly between Buona and the franchisee, without involving outside parties or combining claims. This is a fairly standard clause in franchise agreements, intended to keep arbitrations focused and manageable.
However, there are exceptions to this rule. The joinder of other 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 exception acknowledges that in certain situations, related parties may have a direct and relevant interest in the arbitration, justifying their inclusion in the proceedings.
For a prospective franchisee, this means that while they generally cannot involve third parties in arbitration with Buona, there are specific circumstances where related parties can be joined. This could be beneficial if, for example, a guarantor is involved, as their presence might strengthen the franchisee's position. However, it also means that the franchisee could be drawn into arbitration involving other related parties, which could complicate the process. It is important for a prospective franchisee to understand these conditions and consider how they might apply to their specific situation, especially if they have related business entities or a guarantor.