Must arbitration be conducted on an individual basis for Clean Your Dirty Face disputes?
Clean_Your_Dirty_Face Franchise · 2025 FDDAnswer from 2025 FDD Document
WE AND YOU IRREVOCABLY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM, WHETHER AT LAW OR IN EQUITY, BROUGHT BY EITHER OF US.
17.I. BINDING EFFECT.
This Agreement is binding on us and you and our and your respective executors, administrators, heirs, beneficiaries, permitted assigns, and successors in interest. Subject to our right to modify the Operations Manual and System Standards, this Agreement may not be modified except by a written agreement signed by both our and your duly-authorized officers.
17.J. LIMITATIONS OF CLAIMS AND CLASS ACTION BAR.
EXCEPT FOR CLAIMS ARISING FROM YOUR NONPAYMENT OR UNDERPAYMENT OF AMOUNTS YOU OWE US, ANY AND ALL CONTROVERSIES, DISPUTES, AND CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR OUR RELATIONSHIP WITH YOU WILL BE BARRED UNLESS A JUDICIAL OR ARBITRATION PROCEEDING IS COMMENCED WITHIN ONE (1) YEAR FROM THE DATE ON WHICH THE PARTY ASSERTING THE CLAIM KNEW OR SHOULD HAVE KNOWN OF THE FACTS GIVING RISE TO THE CLAIMS. HOWEVER, THE PARTIES AGREE THAT, IN ORDER TO COMPLY WITH THIS PROVISION, EITHER PARTY MAY COMMENCE A JUDICIAL OR ARBITRATION PROCEEDING BEFORE A RELATED MEDIATION PROCEEDING IS DECLARED COMPLETED.
ANY PROCEEDING WILL BE CONDUCTED ON AN INDIVIDUAL BASIS AND A PROCEEDING BETWEEN US AND OUR AFFILIATES, OR OUR AND THEIR RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS, AND EMPLOYEES, ON THE ONE HAND, AND YOU (OR YOUR OWNERS, GUARANTORS, AFFILIATES, AND EMPLOYEES) MAY NOT BE: (I) CONDUCTED ON A CLASS-WIDE BASIS, (II) COMMENCED, CONDUCTED OR CONSOLIDATED WITH ANY OTHER PROCEEDING,
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Clean Your Dirty Face Franchise Disclosure Document, any arbitration proceedings must be conducted on an individual basis. This means a franchisee cannot participate in a class-wide arbitration against Clean Your Dirty Face, nor can they consolidate their arbitration with any other proceedings. Furthermore, no association or agency can bring a claim on behalf of the franchisee. This requirement applies to disputes involving Clean Your Dirty Face and its affiliates, as well as their respective shareholders, officers, directors, agents, and employees, on one hand, and the franchisee (or their owners, guarantors, affiliates, and employees) on the other.
However, there is an exception to this individual arbitration requirement. If a court or arbitrator determines that the restriction on class-wide or consolidated arbitration is unenforceable for a particular dispute, then the arbitration clause will not apply to that specific dispute. In such cases, the dispute will be resolved in a judicial proceeding as per the agreement's dispute resolution provisions.
This clause also specifies that requests for documents in arbitration are limited to those directly relevant to significant issues and must be restricted in terms of time frame, subject matter, and the individuals or entities involved. Broad requests like "all documents directly or indirectly related to" are not allowed, and interrogatories or requests to admit are prohibited. These provisions regarding individual arbitration and limitations on discovery are intended to benefit and bind third-party non-signatories and will remain in effect even after the agreement expires or terminates.
This clause ensures that disputes are handled individually, potentially reducing Clean Your Dirty Face's exposure to large class-action claims. However, it also means that franchisees must bear the full cost and effort of arbitration on their own, without the ability to pool resources with other franchisees. The limitations on discovery could also make it more challenging for franchisees to gather evidence to support their claims.