The Franchise Memorandum

In NIACCF, Inc. v. Cold Stone Creamery, Inc., 2012 U.S. Dist. LEXIS 70256 (S.D. Fla. May 21, 2012), the U.S. District Court for the Southern District of Florida stayed an action brought by NIACFF, a national organization of Cold Stone franchisees, against Cold Stone pending the outcome of a motion to compel arbitration of the individual franchisees' claims. NIACCF sued Cold Stone in federal court regarding Cold Stone's alleged failure to provide accounting and disclosures related to its receipt of third-party payments, such as vendor rebates and gift cards. Cold Stone moved to compel arbitration in Arizona as to the individual franchisees identified as members of NIACFF and moved to stay the action filed by NIACCF in Florida.

In granting the motion to stay, the court agreed with Cold Stone that each of the individual franchisee members of NIACCF had franchise agreements requiring mandatory arbitation in Arizona of all disputes and controversies related to their franchise agreements or their relationship with Cold Stone. The court found immaterial NIACCF's argument that the motion should be denied because it never agreed to arbitrate with Cold Stone because Cold Stone was trying to arbitrate with the individual franchisees, not NIACFF. The court held that NIACCF should not be allowed to make an end-run around the agreement to arbitrate contained in each franchise agreement.