What rules govern the commercial arbitration between Chicken Guy and the franchisee?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
eed to by the parties and executed in writing.
30. SEVERABILITY AND CONSTRUCTION
- A. Severability. Each article, paragraph, subparagraph, term and condition of this Agreement, and any portions thereof, will be considered severable. If, for any reason, any portion of this Agreement is determined to be invalid, contrary to, or in conflict with, any applicable present or future law, rule or regulation in a final, unappealable ruling issued by any court, agency or tribunal with valid jurisdiction in a proceeding to which Chicken Guy is a party, that ruling will not impair the operation of, or have any other effect upon, any other portions of this Agreement; all of which will remain binding on the parties and continue to be given full force and effect.
- B. No Third Party Beneficiaries. Except as otherwise provided in Section 26, nothing in this Agreement is intended, nor shall be deemed, to confer upon any person or legal entity other than Franchisee and Chicken Guy and its affiliates and such of their heirs, successors and assigns, any rights or remedies under or by reason of this Agreement.
- C. Modification to Scope of Covenants by Law. Franchisee expressly agrees to be bound by any promise or covenant imposing the maximum duty permitted by law that is subsumed within the terms of any provision of this Agreement, as though it were separately articulated in and made a part of this Agreement, that may result from striking from any of the provisions of this Agreement any portion or portions which a court may hold to be unreasonable and unenforceable in a final decision to which Chicken Guy is a party, or from reducing the scope of any promise or covenant to the extent required to comply with such a court order.
- D. Interpretation. No provision of this Agreement shall be interpreted in favor of, or against, any party because of the party that drafted this Agreement.
31. DISPUTES
A. Mediation. Except as provided with respect to injunctive relief as set forth in this Agreement, in the event of any dispute arising from or in connection with this Agreement or the breach thereof or the relationship of the parties, the parties shall use their best efforts to settle the dispute by consulting and negotiating with each other in good faith to attempt to reach a solution satisfactory to both parties. If these methods fail, Chicken Guy and Franchisee agree to submit any claim, controversy, or dispute arising out of this Agreement or the relationship of the parties to non-binding mediation conducted by the American Arbitration Association (the "AAA") and in accordance with its then-current rules for
commercial mediation. Once either party has submitted a dispute to mediation, the obligation to attend will be binding on both parties. Both parties must sign a confidentiality agreement before participating in any mediation proceeding. The mediation will take place in the city where Chicken Guy's principal offices are located at the time the demand for mediation is filed. If a dispute cannot be resolved through mediation, the parties agree to submit the dispute to arbitration, subject to the terms and conditions of Section 31.B.
- B. Arbitration. Subject to Section 31.A., Chicken Guy and Franchisee 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 31.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 relating to arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.) and not by any state arbitration law.
- (1) The arbitrator will have the right to award or include in the award any relief which the arbitrator deems proper under the circumstances, including, without limitation, money damages (with interest on unpaid amounts from the date due), specific performance, injunctive relief, and reasonable attorneys' fees and costs, provided that the arbitrator will not have the right to amend or modify the terms of this Agreement, declare any Proprietary Marks generic or otherwise invalid, or award any punitive or exemplary damages against either party (Chicken Guy and Franchisee hereby waiving to the fullest extent permitted by law any right to or claim for any punitive or exemplary damages against the other). The award and decision of the arbitrator will be conclusive and binding upon all parties, and judgment upon the award may be entered in any court of competent jurisdiction.
- (2) Chicken Guy and Franchisee agree to be bound by the provisions of any limitation on the period of time in which claims must be brought under applicable law. Chicken Guy and Franchisee further agree that, in connection with any such arbitration proceeding, each must submit or file any claim which would constitute a compulsory counterclaim (as defined by Rule 13 of the Federal Rules of Civil Procedure) within the same proceeding as the claim to which it relates. Any such claim which is not submitted or filed as described above will be forever barred. The arbitrator may not consider any settlement discussions or offers that might have been made by either party.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, disputes between Chicken Guy and a franchisee are subject to specific rules for commercial arbitration. Before initiating arbitration, both parties are obligated to attempt to resolve the dispute through good-faith negotiation and non-binding mediation conducted by the American Arbitration Association (AAA), following its commercial mediation rules. The mediation will occur in the city where Chicken Guy's principal offices are located when the mediation demand is filed.
If mediation fails, any controversies, disputes, or claims arising from the Franchise Agreement, the relationship between the parties, the agreement's scope and validity, or any aspect of the Chicken Guy system must be submitted for binding arbitration to the AAA, adhering to its then-current rules for commercial arbitration. A single arbitrator will conduct the arbitration proceedings, which will take place in the city where Chicken Guy's principal offices are located at the time the arbitration demand is filed. The arbitrator cannot choose a different location.
The Federal Arbitration Act (9 U.S.C. Sections 1 et seq.) governs all matters relating to arbitration. The arbitrator has the authority to award appropriate relief, including money damages, specific performance, injunctive relief, and reasonable attorneys' fees and costs, but cannot amend the agreement, declare proprietary marks invalid, or award punitive damages. Both Chicken Guy and the franchisee waive any right to claim punitive or exemplary damages against each other. The arbitrator's decision is conclusive and binding, and judgment upon the award may be entered in any court of competent jurisdiction. Arbitration will be conducted on an individual basis, not as a class action, and cannot be consolidated with other arbitration proceedings involving Chicken Guy and another party.
The franchisee must file any suit against Chicken Guy in the federal or state court having jurisdiction where Chicken Guy's principal offices are located at the time the suit is filed, subject to the arbitration provisions. Chicken Guy may file suit where its principal offices are located, where the franchisee resides or does business, where the franchised restaurant is located, or where the claim arose. Both parties waive the right to a jury trial and any claim for punitive or exemplary damages, agreeing to recover only actual damages. If either party brings an action to enforce the agreement in arbitration or judicial proceeding, the prevailing party is entitled to reimbursement of costs and expenses, including accountants', attorneys', and expert witness fees.