In a Cream arbitration proceeding, what happens if a party fails to submit a claim that would constitute a compulsory counterclaim?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
We and you agree to be bound by the provisions of any applicable contractual or statutory limitations provision, whichever expires earlier. We and you further agree that, in any arbitration proceeding, each party must submit or file any claim which would constitute a compulsory counterclaim (as defined by Rule 13 of the Federal Rules of Civil Procedure) within the same proceeding. Any claim which is not submitted or filed as required will be forever barred. The arbitrator may not consider any settlement discussions or offers that might have been made by either you or us.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, in any arbitration proceeding, both Cream and the franchisee must submit any claim that would constitute a compulsory counterclaim, as defined by Rule 13 of the Federal Rules of Civil Procedure, within the same proceeding.
If a party fails to submit or file a compulsory counterclaim as required, that claim will be permanently barred. This means the party will lose the opportunity to pursue that particular claim against the other party in the arbitration.
This provision encourages parties to bring all related claims at once to promote efficiency and finality in the arbitration process. It is important for prospective Cream franchisees to understand this requirement and to consult with legal counsel to ensure all potential counterclaims are identified and properly submitted during any arbitration proceeding.