Under what circumstances can a Cinnaholic franchisee agree to conduct arbitration outside of their state?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
- (F) A PROVISION REQUIRING THAT ARBITRATION OR LITIGATION BE CONDUCTED OUTSIDE THIS STATE.
THIS SHALL NOT PRECLUDE THE FRANCHISEE FROM ENTERING INTO AN AGREEMENT, AT THE TIME OF ARBITRATION, TO CONDUCT ARBITRATION AT A LOCATION OUTSIDE THIS STATE.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–35)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, a franchisee in Michigan is not required to agree to conduct arbitration outside of the state. However, a Cinnaholic franchisee can enter into an agreement to conduct arbitration at a location outside of Michigan at the time of arbitration. This means that while the initial franchise agreement cannot mandate out-of-state arbitration, a franchisee can later voluntarily agree to it.
This provision protects franchisees from being forced into distant or inconvenient arbitration proceedings at the outset of the agreement. It ensures that the franchisee has the option to arbitrate within their own state, providing a more accessible and potentially less costly venue for dispute resolution.
However, the franchisee retains the flexibility to agree to out-of-state arbitration if they deem it beneficial or necessary at the time a dispute arises. This could occur, for example, if the franchisee believes a neutral location would be advantageous or if they reach a settlement agreement that includes out-of-state arbitration.
It is important for prospective Cinnaholic franchisees in Michigan to understand this distinction. While the franchise agreement cannot initially compel them to arbitrate outside of Michigan, they should be aware that they can voluntarily agree to do so later. Franchisees should carefully consider the implications of any such agreement, including potential costs and logistical challenges.