Does the arbitration section of the Hyper Kidz Franchise Agreement survive termination or non-renewal?

According to Hyper Kidz's 2024 Franchise Disclosure Document, the arbitration section of the Franchise Agreement does indeed survive termination or non-renewal. This means that even after the agreement ends, either through termination or non-renewal, the agreement to resolve disputes through binding arbitration remains in effect. This is a common practice in franchising to ensure that disputes arising from the franchise relationship can be resolved efficiently, even after the formal agreement has ended.

Specifically, any disputes, claims, or controversies between Hyper Kidz and the franchisee related to the agreement's making, performance, or interpretation (including fraud claims) that are not settled through negotiation will be subject to binding arbitration. This arbitration will take place in Howard County, Maryland, following Maryland statutes. The arbitrator must have at least five years of experience in franchising or distribution law and can award specific performance of the agreement.

This survival clause has significant implications for a franchisee. It means that even after the franchise agreement ends, the franchisee cannot pursue a lawsuit against Hyper Kidz in court for disputes covered by the arbitration agreement unless Hyper Kidz chooses to enforce the agreement through judicial process and injunction. Instead, they must go through arbitration, which can be a more streamlined and cost-effective process than litigation. The arbitrator's decision is final and binding, providing a definitive resolution to the dispute. Franchisees should be aware of this provision and understand its implications for resolving any potential disputes with Hyper Kidz.