In Cinnabon franchise disputes, is arbitration conducted on an individual or class-wide basis?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. Individual Actions. We and you agree that arbitration will be conducted on an individual, not a class-wide, basis and that an arbitration proceeding between us and you may not be consolidated with any other arbitration proceeding between us and any other person. Notwithstanding the foregoing or anything to the contrary in this Section 19.1, if any court or arbitrator determines that this prohibition on class-wide arbitration is unenforceable with respect to a dispute that otherwise would be subject to arbitration under this Section 19.1, then the parties agree that this arbitration clause shall not apply to that dispute and that such dispute will be resolved in a judicial proceeding in accordance with Section 19.1.D. (Excepted Disputes).
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to the 2025 Cinnabon Franchise Disclosure Document, arbitration is conducted on an individual basis. The document specifies that arbitration will not be class-wide, meaning each dispute will be handled separately. This prevents franchisees from consolidating their arbitration proceedings against Cinnabon.
This clause has significant implications for prospective franchisees. By agreeing to the franchise terms, a franchisee waives the right to participate in a class action arbitration against Cinnabon. This could be a disadvantage if multiple franchisees have similar grievances, as each would need to pursue arbitration independently, incurring separate costs.
However, the FDD also includes a contingency: if a court or arbitrator deems the prohibition on class-wide arbitration unenforceable, the arbitration clause will not apply to that specific dispute. In such cases, the dispute would be resolved through judicial proceedings. This provides a potential avenue for franchisees to pursue collective action if the individual arbitration clause is successfully challenged.
It is important for potential Cinnabon franchisees to understand this arbitration clause and its implications. While individual arbitration may offer a more streamlined process for resolving disputes, it also removes the potential benefits of a class-wide action. Franchisees should consider the potential costs and benefits before entering into the agreement.