The Franchise Memorandum

A recent decision from the Maine federal district court underscores the need to review provisions in franchise agreements to ensure that they do not have unintended consequences. In Oliver Stores v. JCB, Inc., 2011 U.S. Dist. LEXIS 149718 (D. Maine Dec. 29, 2011), the magistrate judge granted a motion to compel arbitration of two of the three counts of the complaint, but held that the remaining count survived because of the agreement’s savings clause. The savings clause provided that “[i]f any provision herein contravenes the laws or regulations of any state or other jurisdiction wherein the Agreement is to be performed, or denies access to the procedures, forums or remedies provided for by such laws or regulations, such provisions shall be deemed to be modified to conform to such laws or regulations . . . .” The court concluded that the arbitration clause denied the plaintiff “access to the procedures or forums” provided by the Maine franchise statute and noted that a court had only limited authority to review arbitration decisions. Therefore, the court determined that the savings clause precluded that count from being arbitrated.