Can the arbitrator extend, modify, or suspend any terms of the Southern Steer Franchise Agreement?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
The Parties recognize and any mediator, arbitrator and judge is affirmatively advised, that certain provisions of this Agreement reflect rights of Franchisor and Franchisee to take (or refrain from taking) certain actions in exercise of its business judgment based on its assessment of the long term interests of the franchised system as a whole.
Where such discretion has been exercised and is supported by the business judgment of Franchisor or Franchisee, a mediator, arbitrator or judge will not substitute his or her judgment for the judgment so exercised by Franchisor or Franchisee.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, the arbitrator in a dispute is affirmatively advised that certain provisions of the agreement reflect the rights of both Southern Steer and the franchisee to take actions based on their business judgment regarding the long-term interests of the franchise system.
The document states that where such discretion has been exercised and is supported by the business judgment of Southern Steer or the franchisee, the arbitrator will not substitute their own judgment for the judgment exercised by Southern Steer or the franchisee. This indicates that the arbitrator's role is to assess whether business judgment was appropriately applied, rather than to modify the terms of the agreement based on their own assessment.
This clause aims to prevent an arbitrator from altering the contractual obligations or standards based on a different opinion of what is best for the business. It reinforces that the arbitrator should primarily consider whether the actions taken were a reasonable exercise of business judgment within the scope of the agreement, rather than imposing new terms or suspending existing ones.