Can an association or agent bring an arbitration on behalf of a Cream franchisee?
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 proceedings must be conducted on an individual basis. Specifically, an arbitration proceeding between Cream and its affiliates, shareholders, officers, directors, agents, and employees, on one hand, and the franchisee (including their owners, guarantors, affiliates, and employees), on the other hand, cannot be brought on the franchisee's behalf by any association or agent.
This means that a Cream franchisee cannot have an association or agent represent them in an arbitration proceeding against the franchisor. The franchisee must act on their own behalf. This requirement for individual arbitration aims to prevent class-wide or consolidated arbitration proceedings, ensuring that each dispute is handled separately.
However, there is an exception to this rule. If any court or arbitrator determines that the prohibition against class-wide or consolidated arbitration, or representation by an association or agent, is unenforceable, then the agreement to arbitrate does not apply to that specific dispute. In such cases, the dispute would be resolved in a judicial proceeding as per the agreement's dispute resolution provisions.