Can the arbitrator add terms to the Coffee News franchise agreement?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
The parties to this Agreement agree that if any court or competent jurisdiction determines that the specified time period or the specified region of application of any covenant is unreasonable, arbitrary, or against public policy, then a lesser time period, geographical area or both, that is determined to be reasonable, non-arbitrary, and not against public policy, may be enforced against the parties hereto.
The parties to this Agreement agree and acknowledge that they are familiar with the present and proposed operations of "Coffee News" Franchises and believe that the restrictive covenants in this Agreement are reasonable with respect to their subject matter, duration, and geographical application.
Notwithstanding that the parties agree that any court of competent jurisdiction may modify the time period or specify geographical area of applicability in this agreement, the parties do not intend that a court be able to modify the payment terms set forth herein.
- Arbitration.
Except for obtaining injunctive relief by either party against actual or threatened conduct that would cause irreparable harm to that party, all controversies, disputes or claims arising under this Agreement between Franchisor and Franchisee shall be submitted for arbitration to the Office of the American Arbitration Association nearest to Franchisor on demand of either Franchisor or Franchisee.
Such arbitration proceedings shall be conducted in Bangor, Maine.
Except as otherwise provided in this Agreement, such claims shall be heard by one arbitrator in accordance with the then Current Commercial Arbitration Rules of the American Arbitration The administrative cost of the arbitration, including the cost of the Association. arbitrator, shall be borne equally by the parties.
Each party shall be responsible for the payment of its own attorneys' fees and expenses.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to the 2025 Coffee News Franchise Disclosure Document, the franchise agreement specifies that if any portion of the restrictive covenants is deemed unreasonable, arbitrary, or against public policy, it should be considered divisible concerning time and region. The agreement states that if a court determines the specified time period or geographical area of any covenant is unreasonable, a lesser time period or geographical area may be enforced.
However, the Coffee News franchise agreement explicitly states that while a court can modify the time period or geographical area of applicability, the parties involved do not intend for a court to be able to modify the payment terms. This indicates a specific limitation on what aspects of the agreement can be altered through judicial or arbitral intervention.
Regarding dispute resolution, the Coffee News franchise agreement mandates arbitration for controversies, disputes, or claims arising under the agreement, except for actions seeking injunctive relief to prevent irreparable harm. The arbitration proceedings are to be conducted in Bangor, Maine, following the American Arbitration Association's Commercial Arbitration Rules, with each party responsible for their own legal fees and expenses. The administrative costs and arbitrator fees are to be shared equally between the parties. The FDD does not explicitly address whether the arbitrator can add terms to the agreement, but it does specify that the payment terms cannot be modified.