In the Coffee News franchise agreement, what is the effect of the agreement to arbitrate?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
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, any disputes or claims arising under the Franchise Agreement between the franchisor and franchisee will be submitted for arbitration. The only exception to this is if either party seeks injunctive relief against conduct that could cause irreparable harm.
The arbitration will occur through the American Arbitration Association office nearest to the franchisor and will be conducted in Bangor, Maine. A single arbitrator will hear the claims, following the American Arbitration Association's current Commercial Arbitration Rules. The costs associated with the arbitration, including the arbitrator's fees, will be split equally between Coffee News and the franchisee. Each party is responsible for their own attorney's fees and expenses.
This arbitration clause means that a franchisee would likely need to resolve disputes through arbitration rather than through the court system, which is a common practice in franchising. Arbitration is generally considered faster and less expensive than litigation, but it may limit the franchisee's legal recourse. The franchisee will bear the administrative costs of the arbitration equally with Coffee News, and each party pays their own legal fees. The location of the arbitration in Bangor, Maine, may present a cost or logistical challenge for franchisees located further away.