The Franchise Memorandum

The United States District Court for the Western District of North Carolina granted a motion to compel arbitration in a dispute arising out of a voluntarily terminated dealer agreement. High Country Dealerships, Inc. v. Polaris Sales, Inc., 2018 WL 3620494 (W.D.N.D. July 30, 2018). (Gray Plant Mooty represents defendantsupplier Polaris Sales in this case.) The agreement contained a broadly worded arbitration clause requiring the plaintiff (the terminated dealer) to submit all disputes with Polaris to binding arbitration in Minneapolis, Minnesota. Instead of pursuing arbitration, however, the plaintiff had commenced state-court litigation in its home state of North Carolina, claiming that Polaris was required statutorily to repurchase its inventory and other items. Polaris responded to the lawsuit by removing it to federal court and then filing the motion to compel arbitration.

Finding that the dispute fell within the broad scope of the arbitration clause, the district court granted the supplier’s motion. In doing so, the court summarily rejected the dealer’s argument that its agreement was an unenforceable contract of adhesion. The court also rejected the terminated dealer’s request for a finding that the dealer agreement’s choice of Minnesota law was unenforceable. Because the broad language of the arbitration clause required any issue (including choice of law) to be resolved in arbitration, the court would not decide the enforceability of the choice of law provision.