Does Aw require dispute resolution by arbitration or mediation?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE AGREEMENT | SUMMARY |
|---|---|---|
| u. Dispute resolution by arbitration | Sections 18.1 and | Disputes must be mediated before filing an |
| or mediation | 18.2 | arbitration action. |
| v. Choice of forum | Section 18.4 | Litigation must be in Illinois; subject to state law. |
| w. Choice of law | Section 18.4 | Law of the state of Illinois applies, except franchise laws only apply if you meet jurisdictional requirements, subject to state law. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 34–36)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, disputes must be mediated before an arbitration action is filed. Specifically, the FDD outlines that under the franchise agreement, dispute resolution will be handled through mediation or arbitration.
This means that if a franchisee has a dispute with Aw, they are first required to attempt to resolve the issue through mediation. Mediation involves a neutral third party who helps facilitate a discussion and find a mutually agreeable solution. This step is mandatory before moving forward with a more formal arbitration process.
Arbitration, if pursued after mediation fails, is a method of resolving disputes outside of the court system, where a neutral arbitrator hears both sides of the argument and makes a binding decision. The FDD also specifies that any litigation must occur in Illinois and will be subject to Illinois law, although franchise laws will only apply if jurisdictional requirements are met, also subject to state law. This could potentially increase costs for franchisees located outside of Illinois.
The requirement to mediate before arbitrating is a fairly common practice in franchising, as it offers a less expensive and time-consuming way to resolve conflicts. However, franchisees should be aware of the implications of arbitrating disputes, including the limited scope for appeal and the potential costs involved. Franchisees should also note that the choice of forum is Illinois, which may impact the cost and convenience of resolving disputes.