The Franchise Memorandum

In Senior Services of Palm Beach, LLC v. ABCSP Inc., 2012 U.S. Dist. LEXIS 79038 (S.D. Fla. June 7, 2012), a Florida federal court dismissed the case brought by Senior Services of Palm Beach against ABCSP Inc., a franchisor of home health care businesses, and granted ABCSP's motion to compel arbitration in California. Gray Plant Mooty represented franchisor ABCSP in this case.

Senior Services owned an ABCSP franchise in southern Florida. It brought suit against ABCSP over various disputes relating to its franchise agreement. ABCSP filed a motion to compel arbitration, arguing that Senior Service's franchise agreement required that all disputes relating to and arising out of the agreement be brought in arbitration. Senior Services argued that the arbitration clause was unconscionable and should not be enforced.

In granting ABCSP's motion to compel, the court found that the arbitrator, not the court, should determine in the first instance whether the arbitration clause was unconscionable. The curt nevertheless asserted that even if the issue of unconscionability were properly before it, the arbitration clause was neither procedurally nor substantively unconscionable. Applying California law per the franchise agreement's choice of law provision, the court found that there was no procedural unconscionability because the arbitration clause was negotiable, Senior Services was not in a weaker bargaining position than ABCSP when it entered into the franchise agreement, Senior Services was represented by counsel when entering into the franchise relationship, and the arbitration clause was not hidden or buried in the franchise agreement. The court also found that there was no substantive unconscionability because the arbitration clause was not overly harsh or unfairly one-sided.