Can either Chicken Guy or the developer demand binding arbitration?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. Arbitration. Subject to Section 22.A., Chicken Guy and Developer agree that all controversies, disputes, or claims between the parties and their respective affiliates, owners, shareholders, officers, directors, agents, and/or employees arising out of or related to: (1) this Agreement; (2) the relationship between the parties; (3) the scope and validity of this Agreement or any provision of this Agreement (including the validity and scope of the arbitration obligations under this Section 22.B., which the parties acknowledge is to be determined by an arbitrator and not a court); or (4) any aspect of the System or any System standard must be submitted for binding arbitration, on demand of either party, to the AAA and in accordance with its then-current rules for commercial arbitration. The arbitration proceedings will be conducted by a single arbitrator. The arbitration will take place in the city where Chicken Guy's principal offices are located at the time the demand for arbitration is filed. The arbitrator will have no authority to select a different hearing locale other than as described in the prior sentence. All matters
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, both Chicken Guy and the Developer (franchisee) have the right to demand binding arbitration to resolve disputes. Specifically, any controversies, disputes, or claims between the parties arising out of the franchise agreement, the relationship between the parties, the scope and validity of the agreement, or any aspect of the Chicken Guy system must be submitted for binding arbitration if either party demands it. This arbitration is conducted through the American Arbitration Association (AAA) and follows its commercial arbitration rules. The proceedings will be conducted by a single arbitrator in the city where Chicken Guy's principal offices are located when the demand for arbitration is filed.
This means that if a franchisee has a dispute with Chicken Guy, or vice versa, either party can force the other into binding arbitration instead of pursuing a lawsuit in court. This can be a faster and potentially less expensive way to resolve conflicts. However, the arbitrator's decision is final and binding, with limited options for appeal. The arbitrator has the authority to award various types of relief, including money damages, specific performance, injunctive relief, and reasonable attorneys' fees and costs, but cannot amend the terms of the agreement, declare proprietary marks invalid, or award punitive damages.
It is important to note that Chicken Guy and the Developer also agree to first attempt to resolve disputes through non-binding mediation before resorting to arbitration. This involves consulting and negotiating in good faith, and if that fails, submitting the dispute to mediation conducted by the AAA. While mediation is not binding, both parties are obligated to attend once a dispute has been submitted. Furthermore, the arbitration will be governed by the Federal Arbitration Act, not state arbitration laws, and must be conducted on an individual basis, not as a class action. This means a franchisee cannot join with other franchisees to bring a collective claim against Chicken Guy in arbitration.