For Cream franchises, what happens to a dispute if the arbitration clause is deemed unenforceable?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
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, if a court or arbitrator determines that any part of the arbitration agreement is unenforceable, the arbitration clause will not apply to the specific dispute. Instead, the dispute will be resolved through a judicial proceeding, as outlined in the dispute resolution provisions of the franchise agreement. This ensures that disputes will still be resolved, even if arbitration is not an option.
For a prospective Cream franchisee, this means that while Cream prefers disputes to be settled through arbitration, there is a contingency plan in place. If the arbitration clause is deemed unenforceable, the franchisee can expect the dispute to be resolved in a court of law. This could potentially lead to higher costs and a longer resolution process compared to arbitration, depending on the complexity of the case and the court's schedule.
It is important for a potential Cream franchisee to understand the dispute resolution provisions in the franchise agreement, including the governing law (Ohio) and consent to jurisdiction (Columbus, Ohio), as these factors will influence where and how any legal disputes will be handled if arbitration is not possible. Franchisees should consult with legal counsel to fully understand the implications of these provisions.