Does the arbitration clause for Mrcool disputes apply to claims related to a franchisee's violation of Article 6 of the agreement?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
- of Article 6 of this Agreement; and/or (b) claims by either Franchisor or Franchisee under this Agreement that relates to either Franchisor's or Franchisee's failure to pay fees or other monetary obligations due under this Agreement.
- (2) Arbitration Subject to the prerequisite requirements of non-binding mediation as set forth in Sub-Article 18.G.(1), and, except, at Franchisor's election, as to any claims or disputes related to or concerning a breach of this Agreement by Franchisee that, under the terms of this Agreement, may entitle Franchisor to the award of injunctive relief including, but not limited to, Franchisee's violation or purported violation of Article 6 of this Agreement, Franchisor and Franchisee agree that all disputes, controversies, and claims, arising from and/or related to this Agreement, the relationship between Franchisor and Franchisee, the System, and/or the validity of this Agreement and/or the Ancillary Agreements, shall be submitted, on demand of either Franchisor or Franchisee, to the AAA for binding arbitration. Arbitration shall be conducted by one arbitrator in accordance with the AAA's then current rules for commercial disputes, except as may be otherwise required in this Article 18.G. All arbitration proceedings shall be conducted in Graves County, Kentucky or, if suitable AAA facilities are not available in Graves County, Kentucky then at a suitable AAA location selected by the arbitrator that is located closest to Graves County, Kentucky.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, disputes related to a franchisee's violation of Article 6 of the agreement may, at the franchisor's election, be excluded from mandatory arbitration. Specifically, Mrcool retains the right to pursue injunctive relief in court for breaches of the agreement, including violations of Article 6, instead of submitting to arbitration. This means that Mrcool has the option to seek immediate court intervention, such as an injunction, to stop a franchisee from violating the restrictive covenants and other obligations outlined in Article 6.
For a prospective Mrcool franchisee, this clause has significant implications. It means that while many disputes may be subject to arbitration, Mrcool can choose to litigate in court any claims related to a franchisee's breach of Article 6, which covers restrictive covenants and obligations. These obligations include non-competition agreements, confidentiality, and protection of the Mrcool system.
This flexibility allows Mrcool to seek quicker and more decisive remedies, like injunctions, to protect its brand and system from potential harm caused by franchisee actions. However, it also means that a franchisee could face the higher costs and public nature of court litigation if Mrcool chooses that route for Article 6 violations. Franchisees should be aware of this potential exception to the arbitration requirement and understand the scope of Article 6 obligations to minimize the risk of such disputes.