Does the arbitration provision for a Devon Creek franchise remain in effect after the franchise agreement expires or terminates?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
- 20.3.3 This arbitration provision is self-executing and will remain in full force and effect after expiration or termination of this Agreement.
Any arbitration will be conducted on an individual, and not a class-wide or multiple plaintiffs, basis.
If either party fails to appear at any properly noticed arbitration proceeding, an award may be entered against the party by default or otherwise, notwithstanding the failure to appear.
Judgment upon an arbitration award may be entered in any court having jurisdiction and will be binding, final and not subject to appeal.
No punitive or exemplary damages will be awarded against Franchisor, Franchisee, or entities related to either of them, in an arbitration proceeding or otherwise, and are hereby waived.
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, the arbitration provision within the franchise agreement remains in full effect even after the agreement's expiration or termination. This means that any disputes arising between the franchisee and Devon Creek, even after the franchise relationship has ended, will still be subject to arbitration as outlined in the agreement.
This clause ensures that both parties are bound to resolve disputes through arbitration, a process generally considered faster and less expensive than traditional litigation. However, it also means that a franchisee gives up the right to sue Devon Creek in court and have a jury trial for any disputes covered by the arbitration agreement, even after the franchise term concludes.
The arbitration proceedings will be governed by the Federal Arbitration Act and the federal common law of arbitration. Unless Devon Creek elects otherwise, all hearings and proceedings will take place in North Carolina or at the American Arbitration Association. The arbitration will be conducted on an individual basis, not as a class action. The agreement also specifies that no punitive or exemplary damages will be awarded against either party.
This continued obligation to arbitrate is a significant consideration for prospective Devon Creek franchisees. It is essential to understand the implications of this clause, including the costs associated with arbitration and the limitations it places on legal recourse after the franchise agreement ends. Franchisees should seek legal counsel to fully understand their rights and obligations under the arbitration provision.