Under the Remax agreement, what right do both parties waive if they agree to arbitration?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
The parties agree to arbitrate solely on an individual basis, and that this agreement does not permit class arbitration, or any claims brought as a plaintiff or class member in any class or representative arbitration proceeding. The arbitral tribunal may not consolidate more than one person's claims and may not otherwise preside over any form of a representative or class proceeding. Notwithstanding the tribunal's power to rule on its own jurisdiction and the validity or enforceability of the agreement to arbitrate, the tribunal has no power to rule on the validity or enforceability of the agreement to arbitrate solely on an individual basis. In the event the prohibition on class arbitration is deemed invalid or unenforceable, then the remaining portions of the arbitration agreement will remain in force.
Source: Item 22 — Contracts (FDD pages 108–334)
What This Means (2025 FDD)
According to the 2025 Remax Franchise Disclosure Document, both parties agree to arbitrate solely on an individual basis. This means that Remax and the franchisee waive the right to participate in class arbitration or bring claims as a plaintiff or class member in any class or representative arbitration proceeding. The agreement specifies that the arbitral tribunal cannot consolidate claims from multiple individuals and cannot preside over any form of representative or class proceeding.
This waiver is significant because it prevents franchisees from joining together to pursue collective claims against Remax. Individual arbitration may be less costly and time-consuming than class action lawsuits, but it can also put franchisees at a disadvantage due to the franchisor's greater resources and legal expertise. The FDD also states that even if the tribunal has the power to rule on its own jurisdiction and the validity or enforceability of the agreement to arbitrate, the tribunal does not have the power to rule on the validity or enforceability of the agreement to arbitrate solely on an individual basis.
However, the Remax FDD includes a severability clause related to the class arbitration waiver. If the prohibition on class arbitration is deemed invalid or unenforceable, the remaining portions of the arbitration agreement will still remain in effect. This ensures that other aspects of the arbitration agreement, such as the requirement to arbitrate individual disputes, are still enforceable even if the class action waiver is struck down.