Does the Moes Southwest Grill franchise agreement allow for class-wide arbitration?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
B. Individual Actions. We and you agree that arbitration will be conducted on an individual, not a class-wide, basis and that an arbitration proceeding between us and you may not be consolidated with any other arbitration proceeding between us and any other person. Notwithstanding the foregoing or anything to the contrary in this Section 19.1, if any court or arbitrator determines that this prohibition on class-wide arbitration is unenforceable with respect to a dispute that otherwise would be subject to arbitration under this Section 19.1, then the parties agree that this arbitration clause shall not apply to that dispute and that such dispute will be resolved in a judicial proceeding in accordance with Section 19.1.D. (Excepted Disputes).
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
According to Moe's Southwest Grill's 2025 Franchise Disclosure Document, the franchise agreement does not allow for class-wide arbitration. Instead, disputes must be handled on an individual basis. Specifically, the document states that arbitration between Moe's Southwest Grill and the franchisee will be conducted individually and not as part of any class-wide action. This means a franchisee cannot consolidate their arbitration proceeding with any other arbitration proceeding involving Moe's Southwest Grill and another person.
However, there is a condition where this prohibition on class-wide arbitration may be deemed unenforceable. If a court or arbitrator determines that the ban on class-wide arbitration is unenforceable, the agreement specifies that the arbitration clause will not apply to that particular dispute. In such cases, the dispute will be resolved through a judicial proceeding.
This clause has significant implications for prospective franchisees. It means that franchisees are agreeing to resolve disputes with Moe's Southwest Grill individually through arbitration, which can be a more cost-effective and efficient method than litigation. However, it also means that franchisees are giving up the right to participate in a class action against the franchisor, which could be beneficial if there are widespread issues affecting multiple franchisees. The exception regarding the unenforceability of the class-wide arbitration ban provides a potential avenue for franchisees to pursue class actions in certain circumstances, but this would depend on a court or arbitrator first determining that the prohibition is unenforceable.