Can the All States M.E.D. franchisee use a claim against the franchisor as a defense for non-compliance with the franchise agreement?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
tained by it including reasonable accounting and legal fees as provided in Section 22.4. Franchisee waives and disclaims any right to consequential damages in any action or claim against Franchisor concerning this Agreement or any related agreement. In any claim or action brought by Franchisee against Franchisor concerning this Agreement, Franchisee's contract damages shall not exceed and shall be limited to refund of Franchisee's Franchise Fee and Royalty Fees.
23.6 Limitation of Actions
You agree to bring any Claims against us, if at all, within one (1) year of the occurrence of the facts giving rise to such Claims, and that any action not brought within this period shall be barred as a claim, counterclaim, defense, or set-off.
23.7 Prior Notice of Claims
As a condition precedent to commencing an action for a Claim, you must notify us within thirty (30) days after the occurrence of the violation or breach, and failure to timely give such notice shall preclude any claim for damages.
23.8 Internal Dispute Resolution
You must first bring any Claim to our CEO, after providing notice as in Section 23.7 above. You must exhaust this internal dispute resolution procedure before you may bring your Claim before a third party.
23.9 Mediation and Arbitration
Before you may bring any Claim against us, you agree to try for a period of 60 days to mediate such claim before a mutually agreed to mediator in the city or county where our headquarters are located. If we cannot mutually agree on a mediator, you and we agree to use the mediation services of the American Arbitration Association ("AAA"), and split any AAA and mediator fees equally.
If mediation is unsuccessful and you decide to pursue a legal claim against us, you agree to bring such claim solely in binding arbitration conducted in the city or county where our headquarters is located, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. The proceedings will be held by a single arbitrator. The decision of the arbitrator will be final and binding upon the parties.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to the 2024 All States M.E.D. Franchise Disclosure Document, a franchisee's ability to use a claim against All States M.E.D. as a defense for non-compliance with the franchise agreement is limited. Specifically, the franchise agreement states that any action not brought within one year of the facts giving rise to such claims will be barred as a claim, counterclaim, defense, or set-off. This means that if an All States M.E.D. franchisee has a claim against the franchisor but does not pursue it within one year, they cannot use it as a defense in a dispute.
Additionally, the All States M.E.D. franchise agreement requires the franchisee to provide notice to All States M.E.D. within thirty days of any violation or breach before commencing an action for a claim. Failure to provide timely notice precludes any claim for damages. The franchisee must also first bring any claim to the CEO of All States M.E.D. and exhaust this internal dispute resolution procedure before bringing their claim before a third party.
Furthermore, before bringing any claim against All States M.E.D. in court, the franchisee must attempt mediation for 60 days with a mutually agreed-upon mediator or through the American Arbitration Association. If mediation fails, claims must be brought solely in binding arbitration in the city or county of All States M.E.D.'s headquarters. However, the North Dakota addendum modifies these terms, stating that no statement signed by a franchisee can waive claims under state franchise law or disclaim reliance on statements made by the franchisor. Also, the Rhode Island addendum states that the franchisee cannot be restricted in choice of jurisdiction or venue.