Druco Restaurants, Inc. v. Steak N Shake Enterprises, Inc.

Dist. Ct. did not err in denying defendant-franchisor’s motion to stay several related lawsuits pending arbitration in actions seeking declaration that plaintiffs-franchisees were not required under terms of franchise agreements to participate in defendant’s corporate pricing and promotions of menu items offered in their franchise restaurants, where defendant argued that plaintiffs’ disputes were covered by arbitration policy that was adopted for all franchisees after plaintiffs had filed instant lawsuits. While each franchisee’s agreement contained right of defendant to institute non-binding arbitration, arbitration clause in said agreements was illusory because defendant was free to exercise arbitration clause at its whim. Ct also found that arbitration clause in each agreement was too vague and indefinite to be enforceable, where defendant could decide at its sole discretion issues regarding whether and how claims against it would be arbitrated.