Under what circumstances are parties NOT required to attempt arbitration for a Cool Binz dispute?
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, or claim concerns an allegation that you have violated (or threaten to violate, or pose an imminent risk of violating):
-
- Any federally protected intellectual property rights in the Marks, the System, trade secrets, or Confidential Information;
-
- Any claims pertaining to or arising out of any warranty issue;
-
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, while Cool Binz typically requires disputes to be settled through binding arbitration in Ann Arbor, Michigan, under the American Arbitration Association rules, there are specific exceptions where Cool Binz reserves the right to initiate litigation in court instead. This means that a franchisee might find themselves in court rather than arbitration depending on the nature of the dispute.
Cool Binz is not required to arbitrate if the dispute involves allegations that the franchisee has violated or threatens to violate Cool Binz's federally protected intellectual property rights, including trademarks, the Cool Binz system, trade secrets, or confidential information. This is a fairly standard clause in franchise agreements, as intellectual property is a critical asset for the franchisor. Additionally, Cool Binz can pursue litigation for claims related to warranty issues, breaches of restrictive covenants within the franchise agreement, or claims arising from fraud, misrepresentation, or insolvency on the part of the franchisee.
Finally, Cool Binz can bypass arbitration for any claims where the alleged damages are less than $50,000. This exception likely aims to avoid the time and expense of arbitration for smaller disputes, allowing Cool Binz to pursue quicker and potentially less costly resolution through the courts. A prospective franchisee should be aware of these exceptions, as they could significantly impact the way disputes are resolved and the costs associated with them.