Under the Fly Fitness agreement, which rules govern the arbitration process?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
iation shall take place in the then-current location of Franchisor's corporate headquarters. The costs and expenses of mediation, including compensation and expenses of the mediator (and except for the attorneys' fees incurred by either party), shall be borne by the parties equally. Franchisor may specifically enforce Franchisor's rights to mediation, as set forth herein.
10.3 Arbitration.
- 10.3.1 Except disputes not subject to alternative dispute resolution as set forth in Section 10.4, any dispute between Franchisor and Developer arising out of or relating to this Agreement, the Attachments hereto or any breach thereof, including any claim that this Agreement or any of its parts, is invalid, illegal or otherwise voidable or void, which has not been resolved in accordance with Sections 10.1 or 10.2, will be resolved by submission to the American Arbitration Association or its successor organization to be settled by a single arbitrator in accordance with the Commercial Arbitration Rules then in effect for such Association or successor organization.
- 10.3.2 All issues relating to arbitrability or the enforcement of the agreement to arbitrate contained in this Article 10 will be governed by the Federal Arbitration Act (9 U.S.C. §1 et seq.) and the federal common law of arbitration. All hearings and other proceedings will take place in the State of Nebraska, or the offices of the American Arbitration Association, or, if Franchisor so elects, in the county where the principal place of business of Developer is then located.
- 10.3.3 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, Developer, or entities related to either of them, in an arbitration proceeding or otherwise, and are hereby waived.
- 10.3.4 The provisions of this Section 10.3 are independent of any other covenant or provision of this Agreement; provided, however, that if a court of competent jurisdiction determines that any of the provisions are unlawful in any way, the court will modify or interpret the provisions to the minimum extent necessary to have them comply with the law.
- 10.3.5 In proceeding with arbitration and in making determinations hereunder, no arbitrator shall extend, modify, or suspend any terms of this Agreement or the reasonable
- standards of business performance and operation established by Franchisor in good faith. No notice, request or demand for arbitration shall stay, postpone, or rescind the effectiveness of any termination of this Agreement.
- 10.3.6 Except as expressly required by law, Franchisor and Developer shall keep all aspects of any mediation and/or arbitration proceeding in confidence and shall not disclose any information about the proceeding to any third party other than legal counsel who shall be required to maintain the confidentiality of such information.
- 10.4 Exceptions. Notwithstanding the requirements of Sections 10.2 or 10.3, the following claims shall not be subject to mediation or arbitration:
- 10.4.1 Franchisor's claims for injunctive or other extraordinary relief;
- 10.4.2 disputes and controversies arising from the Sherman Act, the Clayton Act or any other federal or state antitrust law;
- 10.4.3 disputes and controversies based upon or arising under the Lanham Act, as now or hereafter amended, relating to the ownership or validity of the Marks;
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the arbitration process between Fly Fitness and the developer will be managed according to specific rules. Except for disputes that are not subject to alternative dispute resolution as outlined in Section 10.4, any dispute arising from the agreement will be submitted to the American Arbitration Association or its successor. A single arbitrator will handle the settlement in accordance with the Commercial Arbitration Rules in effect for that Association. The Federal Arbitration Act governs all issues relating to arbitrability or the enforcement of the arbitration agreement. Unless Fly Fitness elects to hold them in the county where the developer's principal place of business is located, all hearings and other proceedings will occur in the State of Nebraska, or the offices of the American Arbitration Association.
This arbitration provision is self-executing and remains effective even after the agreement expires or terminates. Arbitrations will be conducted on an individual basis, not as part of a class-wide or multiple plaintiffs action. If a party fails to attend a properly noticed arbitration proceeding, an award may be entered against them by default. The judgment upon the arbitration award is binding, final, not subject to appeal, and can be entered in any court with jurisdiction. Punitive or exemplary damages are waived for both Fly Fitness and the developer in any arbitration proceeding.
The provisions regarding arbitration are independent of any other covenant or provision of the agreement. However, if a court finds any provision unlawful, the court will modify or interpret the provisions to comply with the law. No arbitrator can extend, modify, or suspend any terms of the agreement or the standards of business performance established by Fly Fitness. Unless required by law, both Fly Fitness and the developer must keep all aspects of any mediation and/or arbitration proceeding confidential, disclosing information only to legal counsel who must also maintain confidentiality. Certain claims, such as those for injunctive relief, antitrust disputes, disputes under the Lanham Act, and enforcement of post-termination obligations, are not subject to mediation or arbitration.