Venue and Governing Law Provision Ignored

A Washington appellate court affirmed a lower court’s decision refusing to enforce the venue and governing law provision of a franchise agreement’s arbitration clause. The ruling arose from a dispute between a Subway franchisor and a Washington-area franchisee over alleged violations of their franchise agreement.

After the franchisor moved to compel arbitration of their dispute in Connecticut, the franchisee filed suit in Washington state court arguing that arbitration was improper. While the trial court agreed to compel arbitration, it found that the venue and governing law requirements in the franchise agreement’s arbitration clause were unconscionable, and instead ordered arbitration to be held in Washington.

After receiving an unfavorable arbitration ruling, the franchisor moved to vacate the award on the grounds that the original arbitration order contradicted the franchise agreement’s arbitration clause. On appeal, the court affirmed the arbitration award, noting that there were no differences between Connecticut and Washington law applicable to the dispute. Furthermore, the court found no evidence that the franchisor was prejudiced by arbitrating in Washington as opposed to Connecticut.

Saleemi v. Doctor’s Associates, Inc., Wash. Ct. App. No. 40351-0-11, January 24, 2012.

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