Can a Carvel franchisee pursue a class-wide arbitration against the franchisor?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. Individual Actions. We and you agree that arbitration will be conducted on an individual, not a class-wide, basis and that an arbitration proceeding between us and you may not be consolidated with any other arbitration proceeding between us and any other person. Notwithstanding the foregoing or anything to the contrary in this Section 19.1, if any court or arbitrator determines that this prohibition on class-wide arbitration is unenforceable with respect to a dispute that otherwise would be subject to arbitration under this Section 19.1, then the parties agree that this arbitration clause shall not apply to that dispute and that such dispute will be resolved in a judicial proceeding in accordance with Section 19.1.D. (Excepted Disputes).
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, franchisees are restricted from pursuing class-wide arbitration against the company. The franchise agreement specifies that any arbitration will be conducted on an individual basis, meaning a franchisee cannot consolidate their arbitration proceeding with any other person's arbitration proceeding against Carvel. This clause aims to ensure that disputes are handled separately and on their own merits.
However, there is a condition under which this prohibition on class-wide arbitration may not be enforced. If a court or arbitrator determines that the prohibition is unenforceable with respect to a particular dispute, then the arbitration clause will not apply to that specific dispute. In such cases, the dispute would be resolved through a judicial proceeding, as outlined in the section concerning excepted disputes.
This arrangement has significant implications for prospective Carvel franchisees. It means that each franchisee must address their grievances individually through arbitration, which can be more costly and time-consuming than participating in a class action. The exception provides a potential avenue for franchisees to challenge the prohibition on class-wide arbitration, but it ultimately depends on a court or arbitrator's decision regarding the enforceability of the prohibition. Franchisees should be aware of this limitation and consider its potential impact on their ability to resolve disputes with Carvel.