What happens to the litigation if the defendant initiates arbitration of any counterclaim or underlying dispute with Chem Dry?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Franchise Agreement and other agreements | Summary |
|---|---|---|
| any dispute, notwithstanding any state | ||
| law to the contrary. | ||
| v. Choice of forum | Section 17I | Litigation in Tennessee (subject to state |
| law) | ||
| w. Choice of law | Section 17H | Tennessee law applies (subject to state |
| law); Monetary claims for liquidated | ||
| amounts may be asserted in litigation | ||
| instead of arbitration by either you or us. | ||
| The defendant may initiate arbitration of | ||
| any counterclaim or underlying dispute, | ||
| in which case the litigation must be | ||
| dismissed, and the arbitration will be the | ||
| means of dispute resolution. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 51–55)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the defendant in a litigation case may initiate arbitration of any counterclaim or underlying dispute. If the defendant chooses to do so, the litigation must be dismissed. Following the dismissal, the arbitration process will become the means of dispute resolution.
This provision gives the defendant (which could be either Chem Dry or the franchisee) the power to shift the dispute resolution from litigation in court to arbitration. Arbitration is generally considered a more streamlined and less formal process than litigation, potentially saving time and legal costs. However, it also typically involves limited discovery and a decision by an arbitrator that may be more difficult to appeal than a court judgment.
For a prospective Chem Dry franchisee, this means understanding that disputes may not always be resolved in a traditional courtroom setting. It's important to consider the implications of arbitration, including the selection of arbitrators, the rules of evidence, and the potential for appealing the arbitrator's decision. Franchisees should consult with legal counsel to fully understand their rights and obligations under the franchise agreement's dispute resolution provisions.