In the Coffee News franchise agreement, what happens to the terms of the agreement during the period of any dispute or arbitration?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
remainder of the Agreement shall continue in full force or effect as if the Agreement had been signed with the invalid portion so modified or eliminated.
- 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, with the exception of seeking injunctive relief against actions that could cause irreparable harm, any disputes between Coffee News and a franchisee will be submitted to arbitration. The arbitration will occur near Coffee News's headquarters and be managed by the American Arbitration Association, following its commercial arbitration rules. Both parties will equally share the administrative costs of the arbitration, including the arbitrator's fee. Each party is responsible for covering their own legal fees and associated expenses.
Importantly, the FDD states that the rest of the franchise agreement remains in full effect even during a dispute or arbitration. This means that franchisees must continue to meet their obligations under the agreement, such as paying weekly fees and adhering to operational standards, while the dispute is being resolved. Failure to do so could result in a breach of contract, regardless of the ongoing dispute.
This clause is fairly standard in franchise agreements. It ensures that the franchise system continues to operate smoothly while disputes are handled through arbitration. However, it places a significant responsibility on the franchisee to maintain compliance during what could be a challenging and uncertain period. Prospective Coffee News franchisees should carefully consider this aspect and seek legal counsel to fully understand their rights and obligations in the event of a dispute.