Can the arbitrator(s) stay the effectiveness of a pending termination of the Dq Treat agreement?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
- (F) Except for the appeal process described in section 12.1(G), the decision of the arbitrator(s) will be final and binding on all parties to the dispute; however, the arbitrator(s) will have no authority or power to: (i) stay the effectiveness of any pending termination of this agreement; (ii) assess punitive or exemplary damages; or (iii) make any award that extends, modifies or suspends any lawful term of this agreement or any reasonable standard of business performance set by Company.
The arbitrator(s) must also follow the applicable law and may not disregard the law based on principles of justice or equity which are not a specific part of the applicable law.
A judgment may be entered upon the arbitration award by any state or federal court in Minnesota or the state of the Authorized Location.
- (G) Any award rendered by the arbitrator(s) may be appealed pursuant to the AAA's Optional Appellate Arbitration Rules in effect as of the Effective Date of this agreement ("Appellate Rules").
Source: Item 17 — The following paragraph is added to the end of Item 17 of the Disclosure Document: (FDD pages 70–378)
What This Means (2025 FDD)
According to Dq Treat's 2025 Franchise Disclosure Document, the arbitrator(s) do not have the authority or power to stay the effectiveness of any pending termination of the franchise agreement. This means that if Dq Treat decides to terminate the agreement, the termination will proceed regardless of any arbitration proceedings.
This limitation on the arbitrator's power is significant for prospective franchisees. Even if a franchisee believes Dq Treat is wrongly terminating the agreement, the franchisee cannot obtain a stay of termination through arbitration. The franchisee's only recourse would be to pursue the arbitration while the termination proceeds, potentially leading to the loss of the franchise before a final decision is reached.
Additionally, the arbitrator(s) cannot assess punitive or exemplary damages, or make any award that extends, modifies, or suspends any lawful term of the agreement or any reasonable standard of business performance set by Dq Treat. The arbitrator(s) must also follow the applicable law and may not disregard the law based on principles of justice or equity which are not a specific part of the applicable law. However, any award rendered by the arbitrator(s) may be appealed pursuant to the AAA's Optional Appellate Arbitration Rules in effect as of the Effective Date of this agreement.
This clause favors Dq Treat, as it retains the ability to terminate the agreement without the risk of a stay pending arbitration and limits the scope of potential damages. Prospective franchisees should carefully consider this provision and seek legal counsel to understand its implications fully.