J-S31019-18

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

UC TWISTER, LLC

v.

SOFT PRETZEL FRANCHISE 

SYSTEMS, INC. AND RONALD HEIL

APPEAL OF: SOFT PRETZEL 

SYSTEMS, INC.

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 IN THE SUPERIOR COURT OF

 PENNSYLVANIA

 No. 348 EDA 2018

Appeal from the Order Entered December 15, 2017

In the Court of Common Pleas of Philadelphia County Civil Division at 

No(s): July Term, 2017, No. 03995

BEFORE: SHOGAN, J., LAZARUS, J., and DUBOW, J.

MEMORANDUM BY LAZARUS, J.: FILED JUNE 12, 2018

Soft Pretzel Franchise Systems, Inc. (Soft Pretzel) appeals from the trial 

court’s order, entered in the Court of Common Pleas of Philadelphia, denying 

its petition to compel mediation and arbitration.1 After careful review, we 

affirm.

On May 22, 2006, UC Twister, LLC (UC) and Soft Pretzel entered into a 

factory franchise agreement (Franchise Agreement) that granted UC the right 

to operate a Philly Pretzel Factory franchise at 3734 Spruce Street, 

Philadelphia, Pennsylvania. The Franchise Agreement contained the following,

relevant provisions:

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1 This order is appealable as of right. See Pa.R.A.P. 311(a)(8).
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16.2.2. Mediation. At [Soft Pretzel’s] option, all claims or 

disputes between [UC Twister] and [Soft Pretzel] or [Soft 

Pretzel’s] affiliates arising out of, or in any way relating to, this 

Agreement or any other agreement by and between [UC Twister] 

and [Soft Pretzel] or [Soft Pretzel’s] affiliates, or any of the 

parties’ respective rights and obligations arising from such 

agreement must be submitted first to mediation, in 

Philadelphia County, Pennsylvania under the auspices of the 

American Arbitration Association (“AAA”), in accordance with 

AAA’s Commercial Mediation Rules then in effect. Before 

commencing any legal action against [Soft Pretzel] or [its] 

affiliates with respect to any such claim or dispute, [UC Twister] 

must submit a notice to [Soft Pretzel], which specifies, in detail, 

the precise nature and grounds of such claim or dispute.

* * *

16.2.3. Arbitration. Except as otherwise provided in this 

Agreement, all disputes and claims relating to this 

Agreement or any other agreement entered into between 

the parties, the rights and obligations of the parties, or any other 

claims or causes of action relating to the making, interpretation, 

or performance of either party under this Agreement, shall be 

settled by arbitration in Philadelphia County, Pennsylvania, in 

accordance with the Federal Arbitration Act and the Commercial 

Arbitration Rules of the American Arbitration Association (“AAA”).

Franchise Agreement, 5/22/06, at §§ 16.2.2-.2.3 (emphases added).

Under the Franchise Agreement, UC was also granted an exclusive right 

of first refusal to enter into another franchise agreement to open a Philly 

Pretzel Factory at Amtrak’s 30th Street Station. On April 4, 2016, Ronald Heil 

entered into an agreement (April Agreement) with UC, whereby UC agreed to 

sell Heil its right of first refusal for the 30th Street pretzel location for 

$115,000.00.2 The April Agreement contained a “Governing Law” provision 

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2 The purchase price was subsequently modified to $103,000.00.
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providing that “[t]he Parties irrevocably and unconditionally acknowledge and 

agree that any proceeding arising out of or from, in connection with or as a 

result of this Agreement or any of the transactions contemplated hereby shall 

be brought exclusively in the courts of Philadelphia County[.]” April 

Agreement, 4/4/16, at ¶ 5 (emphasis added).

Pursuant to the April Agreement, UC and Heil agreed to make Soft 

Pretzel an escrow agent for the purchase funds. Id. at ¶ 1(c). Under the April 

Agreement, if Amtrak awarded Heil the bid/right to enter lease negotiations 

for the 30th Street location, Heil was to notify UC and Soft Pretzel within 

twenty-four hours and Soft Pretzel would release the funds to UC. Id. at ¶ 

1(g). On September 8, 2016, Heil was awarded the right to open a Philly 

Pretzel Factory at Amtrak’s 30th Street Station. Accordingly, UC demanded 

the release of the escrowed funds. Soft Pretzel, however, requested UC 

execute a release confirming that UC sold its right of first refusal to Heil and 

acknowledge that Soft Pretzel released the purchase price. When UC refused 

to sign the document and Soft Pretzel continued to withhold payment of the 

funds, UC instituted the underlying lawsuit, on August 4, 2017, against Soft 

Pretzel and Heil seeking, among other things, recovery of the purchase price. 

On September 14, 2017, Soft Pretzel sent UC a check for the full purchase 

price. The parties, however, continue to dispute payment of statutory interest 

on the purchase price.

On September 5, 2017, Heil filed preliminary objections claiming 

insufficiency in pleading; UC filed an amended complaint on September 26, 
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2017. On October 27, 2017, Soft Pretzel filed preliminary objections to UC’s 

amended complaint; UC filed a second amended complaint. On November 16, 

2017, Soft Pretzel filed preliminary objections to UC’s second amended 

complaint seeking to have the court order the parties to mediate the dispute 

and, if unsuccessful, to have the matter arbitrated. 

On November 20, 2017, Soft Pretzel filed a petition to compel mediation 

and arbitration. After UC filed a response to Soft Pretzel’s preliminary 

objections and a motion opposing its petition to compel mediation/arbitration, 

the trial court entered an order dismissing the petition to compel. In its 

Pa.R.A.P. 1925(a) order, the trial court explained its ruling in a footnote:

It is quite obvious that the controversy in the instant case arose 

from the April 4th agreement and not the Franchise Agreement. 

As a result, the choice of forum is governed by the terms of the 

April 4th agreement – which makes no mention of mediation 

and/or arbitration. Further, it appears that the parties are fighting 

over the payment of statutory interest, as the principal amount 

due has been paid. It might be advisable for the parties to meet 

with a Judge Pro Tem to resolve this matter in a cost-effective and 

expeditious manner. Alternatively, due to the amount in 

controversy, the arbitration program may be a more appropriate 

forum to resolve this case.

Pa.R.A.P. 1925 Order, 12/15/17, at n.1 (italics added). Soft Pretzel filed a 

timely notice of appeal, raising the following issues for our consideration:

(1) Whether the lower court committed reversible error by 

failing to compel mediation and, if necessary, arbitration where 

the parties’ Franchise Agreement contains provisions requiring the 

parties to first mediate and, if unsuccessful, to arbitrate “all 

disputes and claims relating to [the Franchise Agreement] or any 

other agreement entered into between the parties[.]”

(2) Whether the lower court committed reversible error in 

denying [the petition] to compel arbitration because the dispute 
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is related to or arises from the Franchise Agreement and/or any 

other agreement (i.e.[,] the oral agreement to act as the escrow 

agent) between appellant and appellee.

Appellant’s Brief, at 4.

Soft Pretzel argues that the underlying dispute concerns its obligations 

to UC under an oral escrow agreement. More specifically, it claims the oral 

escrow agreement is within the scope of the broadly worded Franchise 

Agreement, and, thus is controlled by the Franchise Agreement3 and the 

parties are compelled to mediate/arbitrate the instant legal dispute. We 

disagree.

Under the Franchise Agreement, “all claims or disputes between UC and 

Soft Pretzel” relating to the Franchise Agreement or any other agreement 

between UC and Soft Pretzel are first to be submitted to mediation and then, 

if unsuccessful, to arbitration. The language in the Franchise Agreement 

clearly indicates that the disputes and claims relate to the parties to the 

Agreement, not third-party, non-affiliates, like Heil. See Franchise 

Agreement, 5/22/06, at ¶ 16.2.2. (emphasis added) (“all claims and disputes 

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3 A franchise agreement is a contract to be interpreted under contract 

principles. Mace v. Atlantic Refining Marketing Corp., 785 A.2d 491, 496 

(Pa. 2001). In interpreting the language of a contract, a court attempts to 

ascertain the intent of the parties and give it effect. LJL Transp., Inc. v. 

Pilot Air Freight Corp., 962 A.2d 639, 647 (Pa. 2009) (citation omitted). 

“When the words of an agreement are clear and unambiguous, the intent of 

the parties is to be ascertained from the language used in the agreement, 

which will be given its commonly accepted and plain meaning.” Id. (citations 

omitted). Additionally, in determining the intent of the contracting parties, all 

provisions in the agreement will be construed together and each will be given 

effect. Murphy v. Duquesne Univ., 777 A.2d 418, 429 (Pa. 2001). 
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between UC Twister and Soft Pretzel . . . relating to this Agreement or 

any other agreement by and between UC Twister and Soft Pretzel[.]”); 

id. at ¶ 16.2.3 (emphasis added) (“all disputes and claims relating to this 

Agreement or any other agreement entered into between the parties . . . 

shall be settled by arbitration[.]”).

By contrast, the April Agreement establishes Soft Pretzel’s role as 

escrow agent with regard to the Heil-UC right of first refusal for the 30th Street 

location. Specifically, the April Agreement states that the purchase price “shall 

be made in certified bank check or money order to Soft Pretzel Franchise 

Systems, Inc. (“SPFS”) upon execution of Agreement and shall be held in 

escrow until the contingency below is satisfied.” April Agreement, 4/4/16, at 

¶ 1(c). Moreover, pursuant to the April Agreement, “the Parties irrevocably 

and unconditionally acknowledge and agree that any proceeding arising out of 

or from, in connection with or as a result of this Agreement or any of the 

transactions contemplated hereby, shall be brought exclusively in the courts 

of Philadelphia County[.]” Id. at ¶ 5 (emphasis added).

We agree with the trial court that the April Agreement encompasses the 

underlying issue in this lawsuit – namely, the dispute regarding Soft Pretzel’s 

failure to tender the statutory interest on the escrowed purchase monies for 

Heil’s 30th Street soft pretzel franchise; the lawsuit is not based upon the 

franchisor-franchisee relationship between Soft Pretzel and UC set forth in the 

Franchise Agreement. While Soft Pretzel may not be a named party to the 

April Agreement, the instant dispute clearly “aris[es] out of or from, in 
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connection with or [i]s a result of th[e April] Agreement or any of the 

transactions contemplated” by it where Soft Pretzel is named as the escrow 

agent. Accordingly, the trial court properly denied the petition to compel. The 

action was properly brought in the Philadelphia Court of Common Pleas in 

accordance with the clear language of the April Agreement’s “Governing Law” 

provision. LJL Transp., Inc., supra.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 6/12/18