Under what circumstances is Canine Dimensions not required to arbitrate claims with a franchisee?
Canine_Dimensions Franchise · 2025 FDDAnswer from 2025 FDD Document
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- This release shall not apply to any claims which the Franchisee may have arising under (a) the California Franchise Investment Law or the California Franchise Relations Act; (b) the Hawaii Franchise Investment Law; (c) the Maryland Franchise Registration and Disclosure Law; (d) the Minnesota Franchise Act; (e) the New York Franchise Investment Law; (f) the North Dakota Franchise Investment Law; or (g) the Washington Franchise Investment Protection Act, RCW 19.100, and the rules adopted thereunder. This release shall exclude claims arising from Franchisee's failure to pay any amounts due Canine Dimensions in the ordinary course of business. The parties expressly agree that this Mutual General Release Agreement will not apply to any claims Canine Dimensions may have under any Promissory Notes ancillary to the Franchise Agreement, or that pertain to other payment arrangements that the parties may have agreed upon.
- Waiver of California Civil Code Section 1542. Franchisee, for itself and its affiliates, parents, subsidiaries, divisions, partners, owners, shareholders, members, trustees, receivers, executors, representatives, administrators, and the respective officers, directors, agents, managers, principals, members, employees, insurers, successors, assigns, representatives and attorneys of each of them ("Constituents"), acknowledges that it is familiar with Section 1542 of the California Civil Code, which reads as follows:
Source: Item 22 — CONTRACTS (FDD page 36)
What This Means (2025 FDD)
According to Canine Dimensions's 2025 Franchise Disclosure Document, there are specific instances where claims do not have to be arbitrated, particularly for franchisees in certain states. For example, the Mutual General Release Agreement specifies that claims arising under franchise laws of California, Hawaii, Maryland, Minnesota, New York, North Dakota, and Washington are excluded from the release. This implies that franchisees in these states may pursue claims under their respective state franchise laws without being bound by the arbitration terms of the agreement.
Additionally, the addendum for California franchisees notes that while the franchise agreement requires binding arbitration in Florida, the enforceability of such provisions may be affected by California and federal laws, including the Federal Arbitration Act. It also states that generally applicable contract defenses like fraud, duress, or unconscionability could render a binding arbitration provision unenforceable. This suggests that if a franchisee can demonstrate such defenses, they may avoid arbitration.
For franchisees in Iowa, any provision requiring them to prospectively waive compliance with the Iowa Business Opportunity Promotions Law is void. Similarly, for Illinois franchisees, any provision designating jurisdiction and venue outside of Illinois is void, although arbitration outside of Illinois is permitted. Furthermore, no statement signed by a franchisee can waive claims under state franchise law or disclaim reliance on statements made by Canine Dimensions. These state-specific addenda provide franchisees with additional protections and avenues to pursue claims outside of arbitration under certain conditions.