Under what condition, related to class-wide arbitration, would the arbitration clause not apply to a dispute with Carvel and instead be resolved in a judicial proceeding?

According to Carvel's 2025 Franchise Disclosure Document, disputes between Carvel and its franchisees are generally resolved through binding arbitration. However, this arbitration clause has an exception regarding class-wide arbitration. Carvel and the franchisee agree that arbitration will be conducted on an individual basis, not as a class-wide action, and that proceedings cannot be consolidated with other cases.

If a court or arbitrator determines that the prohibition on class-wide arbitration is unenforceable, the arbitration clause will not apply to that specific dispute. In this case, the dispute will be resolved in a judicial proceeding. This means that if a court or arbitrator invalidates the clause preventing class-wide arbitration, the dispute will be settled in court rather than through arbitration.

This condition is important for prospective Carvel franchisees to understand because it outlines the circumstances under which they might find themselves in court rather than in arbitration. While Carvel prefers individual arbitration, the enforceability of the class-wide arbitration waiver is not guaranteed, and a judicial determination against it would shift the dispute resolution venue to the courts.