Can Counselor Realty sue to collect money owed by a franchisee?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
- 10.1 Arbitration. Except as provided below, any dispute arising under or in relation to this Agreement shall be resolved by binding arbitration by the National Center for Dispute Settlement, under its rules for expedited commercial arbitration, in Minneapolis, Minnesota. Each claim or controversy will be arbitrated by Franchisee on an individual basis, and will not be consolidated in any arbitration action with the claim of any other franchisee. The award of the arbitrators is final and binding on all parties. The arbitrators may issue appropriate orders as well as award monetary (but not exemplary or punitive) damages. The prevailing party will be entitled to recover its costs including its reasonable attorneys' fees. We may sue to collect money owed to us, to protect or enforce our rights in the Marks, or to compel inspections or audits.
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, Counselor Realty retains the right to sue a franchisee to collect money owed. However, disputes arising under or in relation to the Franchise Agreement are typically resolved through binding arbitration. This arbitration takes place under the rules for expedited commercial arbitration by the National Center for Dispute Settlement in Minneapolis, Minnesota.
The arbitration process dictates that each claim will be arbitrated individually, preventing franchisees from consolidating claims. The arbitrator's award is considered final and binding, with the ability to issue orders and award monetary damages, excluding exemplary or punitive damages. The prevailing party in the arbitration is entitled to recover costs, including reasonable attorney's fees.
Despite the arbitration requirement for general disputes, Counselor Realty explicitly reserves the right to pursue legal action to collect money owed, protect its trademarks, and compel inspections or audits. This means that Counselor Realty can bypass arbitration and go directly to court for these specific issues. This clause provides Counselor Realty with a direct legal recourse for financial and brand-related matters, while franchisees are bound by arbitration for most other disputes.