Can a separate claim of an unaffiliated third-party be joined with an arbitration against Cream?
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 are to be conducted on an individual basis. This means that a franchisee cannot join a separate claim of an unaffiliated third party with their arbitration proceeding against Cream. This requirement is in place to ensure that each dispute is handled separately and efficiently.
This restriction on joining claims with third parties is intended to streamline the arbitration process and prevent it from becoming overly complex or delayed by unrelated issues. However, there is a notable exception: if a court or arbitrator determines that the prohibition on individual arbitration is unenforceable, then the arbitration clause does not apply, and the dispute will be resolved in a judicial proceeding.
This clause has significant implications for prospective Cream franchisees. It means that any legal disputes must be pursued individually, which could increase the costs and time involved in resolving the issue. Franchisees should be aware of this limitation and consider its potential impact on their ability to seek redress in case of a dispute with Cream. It is advisable to consult with a legal professional to fully understand the implications of this arbitration clause.