Can arbitration for Cream be conducted on a class-wide basis?
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, arbitration will be conducted on an individual basis. Specifically, any arbitration proceeding between Cream and a franchisee cannot be conducted on a class-wide basis. This means a franchisee cannot participate in a class action against the franchisor through arbitration.
Furthermore, the agreement specifies that arbitration proceedings cannot be commenced, conducted, or consolidated with any other arbitration proceeding. Nor can they be joined with any separate claim of an unaffiliated third party, or be brought on behalf of the franchisee by any association or agent. This reinforces the individual nature of any arbitration pursued against Cream.
However, there is a condition. If any court or arbitrator determines that the restrictions preventing class-wide arbitration are unenforceable, then the agreement to arbitrate does not apply to that specific dispute. In such a case, the dispute would be resolved in a judicial proceeding as per the agreement's dispute resolution provisions. This clause provides a potential, albeit unlikely, avenue for class action-type claims to proceed outside of individual arbitration.