Appellant franchisors sought review of an order from the Superior Court of Los Angeles County (California), which denied their motion to compel arbitration of claims for breach of contract and other causes of action brought against them by respondent franchisee.
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An arbitration provision in the parties’ franchise agreement specifically delegated to the arbitrator the task of resolving any disputes concerning the validity of the agreement. The provision limited damages to actual or compensatory damages and required that the award be based on established law, not on broad principles of justice and equity. The trial court found the provision unconscionable. The court held that the trial court erred in refusing to compel arbitration because the franchisee’s Civ. Code, § 1670.5, unconscionability claims lacked merit, regardless of whether or not the delegation clause by itself was enforceable. Although a franchise agreement had characteristics of an adhesion contract, an arbitration provision in a franchise agreement could be enforced absent unfair advantage. The requirement that the award be based on established law was not unconscionable because it did not bar cognizable equitable claims and defenses. The damages limitation was facially mutual, and the franchisee had not alleged any claim that would allow for punitive damages. An injunctive remedy exception was available to both parties. The cost of arbitration was not shown to be prohibitive.
The court reversed the order that had denied the motion to compel arbitration.wrongful termination lawyer cost