What is the significance of the Federal Arbitration Act in relation to the Cinnaholic franchise agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
- 21.1.
Governing Law.
ALL MATTERS RELATING TO ARBITRATION WILL BE GOVERNED BY THE FEDERAL ARBITRATION ACT (9 U.S.C. §1 ET SEQ.).
EXCEPT TO THE EXTENT PROVIDED BY THE FEDERAL ARBITRATION ACT AS REQUIRED HEREBY, THE UNITED STATES TRADEMARK ACT OF 1946 (LANHAM ACT, 15 U.S.C. §1051 ET SEQ.) OR OTHER APPLICABLE FEDERAL LAW, THE TERMS OF
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to the 2025 Cinnaholic FDD, the Federal Arbitration Act (FAA) governs all matters relating to arbitration between the franchisor and the developer (franchisee). This means that any arbitration proceedings will be conducted according to the FAA's guidelines.
The FAA generally favors arbitration as a means of resolving disputes, and it limits the ability of courts to review arbitration awards. This can be beneficial for Cinnaholic, as it can lead to faster and less expensive dispute resolution compared to litigation. However, it also means that a franchisee may have limited recourse if they are unhappy with the outcome of an arbitration.
Specifically, the Cinnaholic franchise agreement states that the American Arbitration Association (AAA) rules will apply in all other respects, and judgment upon the award rendered by the arbitration may be entered in any court having competent jurisdiction. This means that while the FAA sets the overall framework, the AAA's specific procedures will govern the arbitration process, and the arbitration award can be enforced in court.