Is the arbitration provision in the Epcon Communities Franchise Agreement automatically enforceable under Alaska law?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
- Item 17 of the disclosure document is hereby modified by adding the following paragraphs to the end thereof:
"The Franchise Agreement requires application of the laws of Ohio. This provision may not be enforceable under Alaska law.
Under certain circumstances, the Franchise Agreement requires you to participate in binding arbitration. This provision may not be enforceable under Alaska law unless you and Epcon Communities Franchising, LLC agree to the submission of a dispute to binding arbitration or to binding alternative dispute resolution at the time that the dispute arises.
Alaska Stat. § 45.45.750(a)(3) prohibits the requirement that you pay Epcon Communities Franchising's attorneys' fees. If the Franchise Agreement contains a provision that is inconsistent with the statute, the statute will control."
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, the enforceability of the arbitration provision within the Franchise Agreement is specifically addressed for franchisees in Alaska. The standard Franchise Agreement stipulates that Ohio law governs the agreement. However, this may not be enforceable under Alaska law.
Specifically, the FDD states that the binding arbitration clause in the Franchise Agreement may not be enforceable in Alaska unless both Epcon Communities and the franchisee mutually agree to submit a dispute to binding arbitration or alternative dispute resolution at the time the dispute arises. This means that while the standard agreement mandates binding arbitration, Alaska law requires a separate agreement to arbitrate made at the time of the dispute for it to be enforceable.
This addendum serves as a critical modification to the standard franchise agreement for potential Epcon Communities franchisees in Alaska. It ensures that franchisees are aware that they may not be automatically bound by the arbitration clause unless they specifically consent to it when a dispute occurs. This provides an added layer of protection and the right to pursue legal remedies outside of arbitration if they so choose, unless they later agree to arbitration.