The Franchise Memorandum

Franchisee Celine Gueyffier’s attempted opening of an Ann Summers store in Los Angeles was a failure, leading each party to file an arbitration claim asserting that the other had breached the parties’ franchise agreement. The arbitrator found for Gueyffier, concluding that Ann Summers did not provide promised training, guidance, and assistance. In his written award, the arbitrator held that Gueyffier’s failure to give Ann Summers notice of the breach and an opportunity to cure was immaterial because the breaches were incurable.

In Gueyffier v. Ann Summers, Ltd., 2008 WL 2331046 (Cal. June 9, 2008), the Superior Court for Los Angeles County, reversing an intermediate court of appeals, held that absent an express and unambiguous limitation, an arbitrator has the authority to find the facts, interpret the contract, and award any relief rationally related to his or her factual findings and contractual interpretation. Since the parties did not include any such limitation in their contract, the arbitrator did not exceed his powers by interpreting the agreement to allow for equitable excusal of the notice-and-cure condition or by making a factual finding that notice would have been an idle act.