What happens if a compulsory counterclaim is not submitted or filed as required in a Cinnaholic arbitration proceeding?

According to Cinnaholic's 2025 Franchise Disclosure Document, if a franchisee or Cinnaholic fails to submit or file a claim that constitutes a compulsory counterclaim in an arbitration proceeding, that claim is permanently barred. This requirement applies to both the franchisor and the franchisee, meaning both parties must raise any compulsory counterclaims during the arbitration.

A compulsory counterclaim, as defined by Rule 13 of the Federal Rules of Civil Procedure, is a claim that a party has against an opposing party that arises out of the same transaction or occurrence as the opposing party's claim. In simpler terms, it's a claim that's so closely related to the original claim that it should be resolved in the same proceeding.

For a prospective Cinnaholic franchisee, this means it is crucial to identify and assert any potential counterclaims during arbitration. Failure to do so will result in the loss of the right to pursue those claims in the future. This underscores the importance of thorough legal consultation and preparation before entering into arbitration with Cinnaholic.