Where must disputes be arbitrated for a Cost Cutters Family Hair Salon franchise?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| u. | Dispute resolution by arbitration or mediation | Article 23 | Except for certain claims, disputes must be arbitrated in Minneapolis, Minnesota. Any arbitration, or any claim in arbitration (including any defense and any claim of setoff or recoupment), must be brought or asserted before the expiration of the earlier of (1) the time period for bringing an action under any applicable state or federal statute of limitation; (2) one year after the date upon which a party discovered, or should have discovered, the facts giving rise to an alleged claim; or (3) two years after the first act or omission giving rise to an alleged claim. Claims of the franchisor attributable to the underreporting of sales and claims of the parties for indemnification shall be subject only to the applicable state or federal statute of limitation. (Subject to State Law) |
| v. | Choice of forum | Article 24.6 | Arbitration and litigation must be in Hennepin County, Minnesota (Subject to State Law) |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 59–65)
What This Means (2024 FDD)
According to Cost Cutters Family Hair Salon's 2024 Franchise Disclosure Document, disputes, with some exceptions, must be arbitrated in Minneapolis, Minnesota. Furthermore, both arbitration and litigation must occur in Hennepin County, Minnesota. This applies to disputes arising from both the Franchise Agreement and the Development Agreement. However, these stipulations are subject to state law, meaning the specific regulations of the franchisee's state may influence the arbitration process.
This requirement means that a Cost Cutters Family Hair Salon franchisee may be required to travel to Minnesota to resolve disputes with the franchisor, potentially increasing the cost of resolving disagreements. It is important to note that claims regarding underreporting of sales and indemnification are subject to the applicable state or federal statute of limitations, which may differ from the limitations applied to other disputes.
It is fairly common in franchising to see clauses that specify a particular location for dispute resolution, often favoring the franchisor's home state. Prospective franchisees should carefully consider the implications of such clauses, including potential travel costs and the application of laws outside their own state. Franchisees should seek legal counsel to fully understand their rights and obligations regarding dispute resolution under the Franchise Agreement and Development Agreement.