Under what condition will the arbitration clause not apply to a dispute between Byrider and the franchisee, requiring resolution in a judicial proceeding?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing or anything to the contrary in this Section or Section 20.1, if any court or arbitrator determines that all or any part of the preceding sentence is unenforceable with respect to a dispute that otherwise would be subject to arbitration under this Section 19.1, then all parties agree that this arbitration clause shall not apply to that dispute and that such dispute shall be resolved in a judicial proceeding in accordance with Section 20.6.
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, the arbitration clause between Byrider and its franchisees will not apply if a court or arbitrator determines that any part of the clause prohibiting class-wide arbitration is unenforceable. In such a case, the dispute will be resolved in a judicial proceeding. This condition is outlined in Section 19.1 of the franchise agreement.
This means that while Byrider generally prefers disputes to be settled through arbitration, specifically on an individual basis, this preference is not absolute. If a legal authority finds the ban on class-wide arbitration to be unenforceable, the matter can be taken to court. This could occur if the prohibition is deemed to violate a franchisee's rights or is against public policy.
For a prospective Byrider franchisee, this is an important consideration. While arbitration is typically faster and less expensive than litigation, the inability to participate in a class action could be a disadvantage if many franchisees have similar grievances against Byrider. Franchisees should be aware of the circumstances under which they might be able to pursue a judicial remedy instead of arbitration, especially if the clause restricting class-wide arbitration is deemed unenforceable.