Does the Cool Binz Franchisor have the option to require binding arbitration?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
t this internal dispute resolution procedure before you may bring your dispute before a third party. This agreement to first attempt resolution of disputes internally shall survive termination or expiration of this Agreement.
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- Arbitration. At our option, all claims or disputes between us, our shareholders, officers, directors, agents and employees and you, arising out of, or in any way relating to, this Agreement or any other agreement by and between you and us or our affiliates, or any of the parties' respective rights and obligations arising from such agreement, or the operation of the COOL BINZ Business which are not first resolved through the internal dispute resolution procedure set forth in Section 15.F.1 above, must be submitted to binding arbitration in Ann Arbor, Michigan under the auspices of the American Arbitration Association ("AAA"), in accordance with AAA's Commercial Arbitration Rules then in effect, with an arbitrator with at least five (5) years of franchise law experience. We may specifically enforce our 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, or claim concerns an allegation that you have violated (or threaten to violate, or pose an imminent risk of violating):
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- Any federally protected intellectual property rights in the Marks, the System, trade secrets, or Confidential Information;
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- Any claims pertaining to or arising out of any warranty issue;
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- Any of the restrictive covenants contained in this Agreement;
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- Any claims arising out of or related to fraud or misrepresentation by you or your insolvency; or
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- Any claims where the damages alleged are less than $50,000.
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- Selection of Venue. Nothing contained in this Agreement
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, Cool Binz has the option to require franchisees to submit to binding arbitration. Specifically, all claims or disputes between Cool Binz and a franchisee must be submitted to binding arbitration in Ann Arbor, Michigan, under the auspices of the American Arbitration Association (AAA). The arbitration will follow AAA's Commercial Arbitration Rules, using an arbitrator with at least five years of franchise law experience.
This means that if a dispute arises between a Cool Binz franchisee and the company, Cool Binz can force the franchisee to resolve the issue through arbitration rather than in court. Arbitration is generally faster and less expensive than litigation, but the decision is binding and there is limited ability to appeal. The franchisee and Cool Binz will each bear their own costs of arbitration, and they will share the costs of the arbitrator equally. This agreement to arbitrate survives any termination or expiration of the Franchise Agreement.
However, Cool Binz is not required to arbitrate and may initiate litigation in court for certain disputes. These include allegations that the franchisee has violated federally protected intellectual property rights, claims pertaining to warranty issues, violations of restrictive covenants, claims related to fraud or misrepresentation by the franchisee or their insolvency, or claims where the damages alleged are less than $50,000. Cool Binz can also apply to any court having jurisdiction for emergency relief to protect their interests, such as a writ of attachment or injunction.
It is important for a prospective Cool Binz franchisee to understand this arbitration clause, as it can significantly impact how disputes with the franchisor are resolved. Franchisees should consult with an attorney to fully understand the implications of binding arbitration and the specific exceptions outlined in the Franchise Agreement.