Can a Cream arbitration be commenced, conducted, or consolidated with any other arbitration proceeding?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
WE AND YOU AGREE THAT ARBITRATION WILL BE CONDUCTED ON AN INDIVIDUAL BASIS AND THAT AN ARBITRATION PROCEEDING BETWEEN US AND ANY OF OUR AFFILIATES, OR OUR AND THEIR RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS, AND EMPLOYEES, ON THE ONE HAND, AND YOU (OR YOUR OWNERS, GUARANTORS, AFFILIATES, AND EMPLOYEES), ON THE OTHER HAND, MAY NOT BE: (I) CONDUCTED ON A CLASS-WIDE BASIS; (II) COMMENCED, CONDUCTED, OR CONSOLIDATED WITH ANY OTHER ARBITRATION PROCEEDING; (III) JOINED WITH ANY SEPARATE CLAIM OF AN UNAFFILIATED THIRD-PARTY; OR (IV) BROUGHT ON YOUR BEHALF BY ANY ASSOCIATION OR AGENT. Notwithstanding the foregoing, if any court or arbitrator determines that all or any part of the preceding sentence is unenforceable with respect to a dispute, controversy, or claim that otherwise would be subject to arbitration under this Section, then all parties agree that this arbitration clause shall not apply to that dispute, controversy, or claim and that such dispute, controversy, or claim shall be resolved in a judicial proceeding in accordance with the dispute resolution provisions of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, any arbitration proceeding between Cream and a franchisee must be conducted on an individual basis. Specifically, the agreement outlines that such proceedings cannot be commenced, conducted, or consolidated with any other arbitration proceeding. This means a franchisee cannot join their arbitration with other franchisees or parties.
This requirement for individual arbitration has significant implications for prospective Cream franchisees. It prevents franchisees from collectively addressing similar grievances against Cream through a single arbitration process. This can increase the cost and complexity for individual franchisees pursuing claims, as they must bear the full burden of legal and arbitration expenses independently.
However, there is a caveat. If a court or arbitrator deems the restriction on consolidated arbitration unenforceable for a particular dispute, then the arbitration clause will not apply to that specific case. In such instances, the dispute would be resolved through judicial proceedings as per the agreement's dispute resolution provisions. This exception offers a potential avenue for franchisees to pursue collective action if the individual arbitration requirement is successfully challenged in court or arbitration.