Can the arbitrator delete terms from the Coffee News franchise agreement?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
enants set forth in this Agreement is held to be unreasonable, arbitrary, or against public policy, then that portion of those covenants shall be considered divisible as to time and region. 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.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
Based on 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 regarding time and region. This means that a court with competent jurisdiction may modify the time period or geographical area of applicability within the agreement.
However, the agreement explicitly states that the parties do not intend for a court to modify the payment terms. This indicates a clear distinction between modifiable and non-modifiable terms within the contract. The arbitration proceedings will be conducted in Bangor, Maine, according to the American Arbitration Association rules.
For a prospective Coffee News franchisee, this means that while certain restrictive aspects of the agreement, such as geographical limitations or time periods, could be subject to modification through legal proceedings, the core financial obligations are intended to remain fixed. Franchisees should be aware of this limitation and fully understand the payment terms before entering into the agreement. It is important to note that each party is responsible for their own legal fees and expenses during arbitration.