During a dispute or arbitration, is the Coffee News franchisee still obligated to pay all fees due?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
Based on the 2025 Coffee News Franchise Disclosure Document, the agreement specifies that if any part of the restrictive covenants is deemed unreasonable, arbitrary, or against public policy, it should be considered divisible concerning time and region. The agreement also states that if a court determines that 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 modify the payment terms. This suggests that the payment terms, including weekly fees, are intended to remain in effect regardless of disputes or arbitration proceedings concerning other aspects of the agreement.
While the FDD outlines arbitration procedures, it does not explicitly state whether a franchisee is obligated to continue paying fees during a dispute or arbitration. Given the statement that the parties do not intend for payment terms to be modified by a court, it is likely that Coffee News expects franchisees to continue fulfilling their financial obligations even during a dispute. A prospective franchisee should seek clarification from the franchisor on this matter to fully understand their obligations.