A federal court in New Jersey granted a franchisor's motion to compel arbitration of disputes involving seven frozen yogurt franchises, even though the claims were subject to different arbitration provisions in different agreements, providing for different arbitral organizations and procedures.

An insolvent franchisee sought to liquidate assets. Each franchise agreement included arbitration and mediation clauses. The franchisee brought a claim against its franchisor for fraud, breach of contract, unjust enrichment and violation of the New Jersey franchise law. The franchisee argued the court should not compel arbitration because the various agreements' arbitration provisions had different language, were in conflict, and did not specify a uniform method of arbitration.

Two franchise agreements provided for arbitration according to rules of the American Arbitration Association. The other agreements called for arbitration with any reputable arbitration services, specifically noting CPR and JAMS.

The court found the various clauses did not require separate arbitrations. The court concluded that while the provisions differed on rules governing arbitration, the differences were minor and did not preclude compelling arbitration. The court also found that the parties could comply with all the provisions by, for example, retaining as arbitrator a neutral, former judge who was willing to proceed according to American Arbitration Association rules.

While speed, cost, and privacy may no longer be persuasive grounds to support inclusion of arbitration provisions in franchise agreements, arbitration often provides control over the location of the dispute, lowers the damages that can be recovered by franchisees, and limits the number of parties to the action. Franchisors often have a tactical advantage if the franchise agreement contains an arbitration provision, particularly in disputes against multi-unit franchisees that own units spread across different jurisdictions.

The nature and extent of these characteristics of arbitration usually advance the business and legal interests of the franchisor.

See Mitnick v. Yogurtland Franchising, Inc., 2017 WL 3503324 (D.N.J. Aug. 16, 2017).