Is arbitration required for Cool Binz disputes concerning restrictive covenants?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
r rights to arbitration. Each party shall bear its own cost of arbitration and you and we shall share costs of the arbitrator equally. This agreement to arbitrate shall survive any termination or expiration of this Agreement.
- a. Notwithstanding the foregoing, we shall not be required to arbitrate, and may initiate litigation in court, in accordance with the procedure set forth in Section 15 F.3, any controversy, dispute, or claim as set forth in this Section 15.F.2 if such controversy, dispute,
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, arbitration is not required for disputes concerning restrictive covenants. Cool Binz, at its option, generally requires claims or disputes to be submitted to binding arbitration in Ann Arbor, Michigan, under the American Arbitration Association rules. However, Cool Binz is not required to arbitrate and may initiate litigation in court if the dispute concerns a franchisee's violation (or threatened violation) of any of the restrictive covenants in the agreement.
This means that Cool Binz retains the right to pursue legal action in court against a franchisee who violates the restrictive covenants, rather than being bound by arbitration. Restrictive covenants typically include non-compete agreements or confidentiality clauses that protect Cool Binz's business interests.
For a prospective franchisee, this clause is important because it means that Cool Binz can choose to sue them in court over a restrictive covenant dispute, which could potentially be more costly and time-consuming than arbitration. Franchisees should carefully review the restrictive covenants in the franchise agreement and understand the potential consequences of violating them.