Are there any claims that are exceptions to the arbitration requirement for Pearce Bespoke franchise disputes?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise | Summary | |
|---|---|---|---|
| Agreement | |||
| a. | Length of the franchise | Section 2(A) | 10 years |
| b. | Renewal or extension of the term | Section 2(B) | If you meet the renewal requirements set forth in the Franchise Agreement, you can renew the Franchise Agreement for up to two additional 5-year period(s). |
| c. | Requirements for you to renew or extend | Section 2(B) | Provide advance notice in writing, sign then current Franchise Agreement, pay renewal fee, remodel, meet all current Brand Standards, secure extension of lease and be in compliance with current Franchise Agreement during the term of the Agreement. You may be asked to sign a Franchise Agreement with materially different terms and conditions than your original Franchise Agreement. The entire provision is subject to state law. |
| d. | Termination by you | Section 16(A) | If you are complying with the Franchise Agreement, and Pearce Bespoke fails to cure a material default within 30 days after Pearce Bespoke’s receipt of written notice, subject to state law. |
| e. | Termination by Pearce Bespoke without cause | Not Applicable | Not Applicable |
| f. | Termination by Pearce Bespoke with cause | Sections 15(A) and (B) | Pearce Bespoke can terminate the Franchise Agreement only if you default. Subject to state law. |
| g. | “Cause” defined – curable defaults | Sections 15(A) and (B) | You have 30 days to cure a violation of any material provision of the Franchise Agreement, non-payment of amounts owed to Pearce Bespoke or any applicable local advertising cooperative, failure to abide by Pearce Bespoke’s standards and requirements in operating the Franchise, an assignment of assets to creditors and the expiration or termination of the Franchise’s lease. Subject to state law. |
| Provision | Section in Franchise Agreement | Summary offering Pearce Bespoke a right of first refusal; if assignee is your spouse or child, no transfer fee is required. | |
| q. | Non-competition covenants during the term of the franchise | Section 18(A) | No direct or indirect involvement in any resale mobile business involving the purchase and/or sale of custom clothing and accessories other than the one authorized in the Franchise Agreement, without Pearce Bespoke’s prior written consent, subject to state law. |
| r. | Non-competition covenants after the franchise is terminated or expires | Sections 18(B) and (C) | No direct or indirect involvement in any resale mobile business involving the purchase and/or sale of custom clothing and accessories for 2 years within 10 miles of the Franchise or any other Pearce Bespoke Franchise. If the franchisee is in breach of this provision, the noncompetition period will be extended for a period of time equal to the time the franchisee operated a competing business, subject to state law. |
| s. | Modification of the | Sections 3I, 8(N) and 20(A) | Manuals, list of authorized Marks and required goods |
| agreement | and (B) | subject to change. | |
| t. | Integration/merger clause | Section 20(G); | Only the terms of the Franchise Agreement are binding (subject to state law). Any other promises may not be enforceable. Nothing in the Franchise Agreement or any related document is intended to disclaim the representations made in this Disclosure Document. |
| u. | Dispute resolution by arbitration or mediation | Section 19(A) | Except for certain claims, all disputes must be arbitrated in Huntersville, North Carolina (subject to state law). |
| v. | Choice of forum | Sections 18(D) and 19 | All disputes that are subject to arbitration must be arbitrated in Huntersville, North Carolina. Other claims may be decided by any court of competent jurisdiction (subject to APPLICABLE state law). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 31–34)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the franchise agreement mandates arbitration for most disputes, but there are exceptions. Specifically, the document states that "Except for certain claims, all disputes must be arbitrated in Huntersville, North Carolina (subject to state law)." This indicates that not all claims are subject to arbitration, though the FDD does not specify which claims are exempt.
Additionally, the FDD notes that "Other claims may be decided by any court of competent jurisdiction (subject to APPLICABLE state law)." This suggests that if a claim is not subject to mandatory arbitration, it can be pursued in a court that has the authority to hear the case. The choice of forum and the applicable law are also subject to state law, which means that the specific regulations in the franchisee's state may affect how disputes are resolved.
Prospective Pearce Bespoke franchisees should carefully review Section 19(A) of the Franchise Agreement to understand which specific types of claims are not subject to arbitration. It would be prudent to seek legal counsel to fully understand the implications of these dispute resolution provisions and how they may affect the franchisee's rights and obligations. Understanding these exceptions is crucial for franchisees to make informed decisions about entering into the franchise agreement and to be prepared for potential disputes.