Are the arbitrator's awards in a Cream arbitration final and binding?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
We and you agree that all controversies, disputes, or claims between us or any of our affiliates, and our and their respective owners, officers, directors, agents, and employees, on the one hand, and you and your owners, guarantors, affiliates, and employees, on the other hand, arising out of or related to: (1) this Agreement or any other agreement between you (or any of your owners) and us (or any of our affiliates); (2) our relationship with you; (3) the scope or validity of this Agreement or any other agreement between you (or any of your owners) and us (or any of our affiliates) or any provision of any of such agreements (including the validity and scope of this arbitration provision, which is to be determined by an arbitrator, not a court); or (4) any System Standard, must be submitted for binding arbitration, on demand of either party, to the American Arbitration Association (the "AAA"). The arbitration proceedings will be conducted by one arbitrator and, except as this Section otherwise provides, according to the AAA's then-current Commercial Arbitration Rules. All proceedings will be conducted at a suitable location chosen by the arbitrator that is within 50 miles of our or, as applicable, our successor's or assign's then-current principal place of business (currently, Columbus, Ohio). All matters relating to arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.). The interim and final awards of the arbitrator shall be final and binding upon each party, and judgment upon the arbitrator's awards may be entered in any court of competent jurisdiction.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, the interim and final awards made by the arbitrator in any arbitration proceedings are considered final and binding on each party involved. Furthermore, the document states that a judgment upon the arbitrator's awards may be entered in any court that has the necessary jurisdiction. This means that once the arbitrator makes a decision, Cream and the franchisee must abide by it, and the decision can be legally enforced through the court system.
This clause is significant for prospective Cream franchisees because it clarifies the resolution process for disputes. Arbitration is a common method used to resolve conflicts outside of court, and the agreement that the arbitrator's decisions are binding provides a level of certainty. However, it also means that franchisees have limited options to appeal the decision, making the selection of a competent arbitrator crucial.
It is also important to note that all matters relating to arbitration are governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.). The arbitration proceedings will be conducted by one arbitrator and, except as this Section otherwise provides, according to the AAA's then-current Commercial Arbitration Rules. All proceedings will be conducted at a suitable location chosen by the arbitrator that is within 50 miles of Cream's principal place of business (Columbus, Ohio).