Where will the binding arbitration occur for Desi District, as stated in the California Addendum?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
The Franchise Agreement requires binding arbitration. The arbitration will occur in Frisco, Texas, with the costs being borne equally by Franchisor and Franchisee. Prospective franchisees are encouraged to consult private legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code Section 20040.5, Code of Civil Procedure Section 1281, and the Federal Arbitration Act) to any provisions of a franchise agreement restricting venue to a forum outside the State of California.
Source: Item 23 — RECEIPTS (FDD pages 52–140)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, the binding arbitration for franchisees will occur in Frisco, Texas. The California Addendum specifies that the costs associated with the arbitration will be equally shared between Desi District and the franchisee.
However, the addendum also advises prospective franchisees to seek legal counsel to understand how California and federal laws might apply to franchise agreement provisions that restrict the venue to a location outside of California. This is particularly relevant due to California Business and Professions Code Section 20040.5, Code of Civil Procedure Section 1281, and the Federal Arbitration Act.
This means that while the Desi District franchise agreement stipulates arbitration in Texas, California franchisees should be aware of their rights under California law, which may allow for arbitration to occur within the state under certain circumstances. Franchisees should consult with an attorney to fully understand their rights and obligations regarding arbitration.