Court Watch

Two recent U.S. district court cases considered claims by franchisees seeking to prevent the enforcement of arbitration clauses in their contracts. Ace Hardware Corporation v. Advanced Caregivers, LLC d/b/a/ Hialeah Ace Hardware, et al., Bus. Franchise Guide (CCH) '14,935 (USDC, N.D. Illinois, Oct. 18, 2012) was an action by Ace to compel arbitration of fraud claims brought in state court by the respondents. The respondents, apparently an entity and its owner, had signed various agreements in connection with the entity becoming an Ace Hardware store owner. At the time of their signing, the agreements used by Ace did not contain an arbitration provision. Several months after the agreements were signed by the parties, Ace notified the respondents that there was an error in the agreements concerning the address of the respondents' Ace store. Ace forwarded revised agreements to the respondents. Between the time the original agreements were signed and when the revised agreements were provided, the standard-form agreements used by Ace were modified to require arbitration of disputes between the parties to the contracts. In the cover letter to the respondents, Ace did not point out the arbitration provisions, only that the agreements now contained the correct store address. The respondents signed and returned the revised agreements to Ace.