For Chem Dry, can monetary claims for liquidated amounts be asserted in litigation instead of arbitration?
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 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 55–59)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, either the franchisor or the franchisee can initially pursue monetary claims for liquidated amounts in court litigation rather than through arbitration. This is an exception to the standard arbitration process. The litigation would take place in Tennessee, and Tennessee law would apply.
However, this initial choice is not absolute. If the defendant in the litigation (whether Chem Dry or the franchisee) initiates arbitration regarding any counterclaim or the underlying dispute, the court case must be dismissed. In that event, the dispute will then be resolved through arbitration, making arbitration the final method of dispute resolution.
This clause provides an initial option for a quicker resolution of monetary claims in court, but it also includes a mechanism for either party to shift the dispute to arbitration if they prefer that method. This could be beneficial for franchisees seeking a faster resolution of certain financial disputes, but they must also be aware of the possibility of the case being moved to arbitration if the other party chooses that route.