In the event of a dispute with Byrider, who determines the validity and scope of the arbitration obligations?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
The parties agree that all controversies, disputes, or claims between Company and its affiliates, and their respective shareholders, officers, directors, agents, and/or employees, and Franchisee (and/or Franchisee's owners, guarantors, affiliates, and/or employees) arising out of or related to:
- (1) this Agreement or any other agreement between the parties;
- (2) Company's relationship with Franchisee;
- (3) the validity of this Agreement or any other agreement between the parties or any provision of any such agreements (including validity and scope of the arbitration
obligations under this Section, which the parties acknowledge are to be determined by an arbitrator, not a court); or
(4) any System requirement;
must be submitted for binding arbitration, on demand of either party, to Judicial Arbitration and Mediation Service ("JAMS") or its successor (or an organization designated by JAMS or its successor). All questions of arbitrability shall be determined by the arbitrator. The arbitration proceedings will be conducted by one arbitrator and, except as this Subsection otherwise provides, according to the then current arbitration rules of JAMS. All proceedings will be conducted at a suitable location chosen by the arbitrator in the Indianapolis, Indiana metropolitan area. All matters relating to arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.). Judgment upon the arbitrator's award may be entered in any court of competent jurisdiction.
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to the 2025 Byrider Franchise Disclosure Document, in the event of a dispute, an arbitrator, not a court, will determine the validity and scope of the arbitration obligations. This means that any disagreements regarding whether a particular issue falls under the arbitration agreement will be decided by the arbitrator assigned to the case.
This clause is significant for prospective franchisees because it removes the ability to have a judge decide on the scope and validity of the arbitration agreement. Instead, the arbitrator, who may be more familiar with industry-specific issues, will make that determination. This can be beneficial if the franchisee believes the arbitrator will be more impartial or knowledgeable about the franchise relationship. However, it also means the franchisee gives up some rights to challenge the arbitration agreement in court.
Byrider specifies that all questions of arbitrability shall be determined by the arbitrator. The arbitration proceedings will be conducted by one arbitrator according to the rules of the Judicial Arbitration and Mediation Service (JAMS). The location for these proceedings will be chosen by the arbitrator within the Indianapolis, Indiana metropolitan area, and the Federal Arbitration Act will govern all matters relating to arbitration. This ensures a structured process for resolving disputes, but it also binds the franchisee to a specific set of rules and a specific location for arbitration, which may add to the cost of resolving disputes.
It is important for potential Byrider franchisees to understand that by agreeing to this arbitration clause, they are waiving their right to have these specific issues decided in a traditional court setting. Franchisees should consider the implications of this decision, including the cost and location of arbitration, and the potential impact on their ability to challenge the arbitration agreement itself.