For Cream franchises, which contractual or statutory limitations provision applies in arbitration, the one that expires earlier or later?
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, Cream and the franchisee agree to adhere to the applicable contractual or statutory limitations provision, specifically the one that expires earlier. This means that if there's a conflict between the contractual limitations period outlined in the franchise agreement and a statutory limitations period provided by law, the shorter of the two will govern any arbitration proceedings.
This provision is significant for prospective Cream franchisees because it can directly impact their ability to bring claims against the franchisor. If a franchisee waits too long to initiate arbitration, relying on a longer contractual limitation when a shorter statutory one applies, their claim could be barred. It is crucial for franchisees to be aware of both contractual and statutory limitations periods and to understand which one controls in their jurisdiction.
Furthermore, the FDD states that any claim that would constitute a compulsory counterclaim must be submitted or filed within the same arbitration proceeding. Failure to do so will result in the claim being permanently barred. This encourages all related disputes to be resolved in a single proceeding, promoting efficiency but also requiring franchisees to be diligent in identifying and asserting all potential claims at once. Cream also specifies that settlement discussions or offers made by either party will not be considered by the arbitrator.