What is the effect of mediation on the admissibility of evidence in an Alloy dispute?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Before any party may bring an action in court or against the other, or commence an arbitration proceeding (except as noted below), the parties must first meet to mediate the dispute. Specifically, no litigation or arbitration action may be commenced until the earlier of thirty (30) days from written notice by one party to the other of a request to initiate mediation, or the mutual agreement by both parties that mediation has been unsuccessful if the notified party fails to respond to the requesting party within thirty (30) days of notification. The mediation will be held in the county where our headquarters are then located (currently, Roswell, Georgia). Any such mediation will be non-binding and conducted by the American Arbitration Association in accordance with its then-current rules for mediation of commercial disputes. Prior to the mediation, each party involved in the mediation must sign the standard confidentiality agreement designated by us or the
mediator. The mediator will be disqualified as a witness, expert or counsel for any party with respect to the dispute or any related matter. Mediation is a compromise negotiation and will constitute privileged communications under the law governing this Agreement. The entire mediation process will be confidential and the conduct, statements, promises, offers, views and opinions of the mediator and the parties will not be discoverable or admissible in any legal proceeding for any purposes; provided, however, that evidence which is otherwise discoverable or admissible will not be excluded from discovery or admission as a result of its use in the mediation.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, mediation is considered a compromise negotiation and is treated as privileged communication. The entire mediation process is confidential, meaning the conduct, statements, promises, offers, views, and opinions of both the mediator and the parties involved are not discoverable or admissible in any legal proceeding. This encourages open and honest communication during mediation, as parties can speak freely without fear of their words being used against them later in court.
However, the confidentiality rule has an important exception. Evidence that is otherwise discoverable or admissible does not become excluded simply because it was used during the mediation. This means that if evidence exists independently of the mediation process, it can still be used in legal proceedings, even if it was also presented during mediation. This prevents parties from shielding existing evidence from discovery by introducing it in mediation.
For a prospective Alloy franchisee, this means that while the mediation process itself is confidential, any underlying evidence that could be used in a legal dispute remains discoverable. This encourages franchisees to approach mediation in good faith, knowing that relevant evidence cannot be hidden. It also means franchisees should be prepared to potentially disclose any information presented during mediation if that information is also available through other means.