What dispute resolution process is required for disputes related to the Bang Cookies Multi-Unit Development Agreement, and where must it take place?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
| q. | Non-competition covenants during the term of the franchise | Not applicable | Not applicable as to Multi-Unit Development Agreement. However, each Shop developed pursuant to Multi-Unit Development Agreement will be subject to non-competition covenants set forth in each respective Franchise Agreement. |
|---|---|---|---|
| r. | Non-competition covenants after the franchise is terminated or expires | Not applicable | Not applicable as to Multi-Unit Development Agreement. However, each Shop developed pursuant to Multi-Unit Development Agreement will be subject to non-competition covenants set forth in each respective Franchise Agreement. |
| s. | Modification of the agreement | 5.3, 7.11 | Only by written agreement between you and us or if governing law requires a modification. We can change the form of the Franchise Agreement for future Shops which will not alter your obligations under the Multi-Unit Development Agreement. |
| t. | Integration/merger clauses | 7.12 | The Multi-Unit Development Agreement is the entire agreement between you and us relating to the development of the Exclusive Territory. Notwithstanding the foregoing, nothing in any agreement is intended to disclaim the express representations made in the Franchise Disclosure Document, its exhibits and amendments. |
| u. | Dispute resolution by arbitration or mediation | 7.5, 7.6 | Except for certain claims for injunctive relief, all disputes must first be submitted to non-binding mediation in Bergen County, New Jersey and, if mediation is unsuccessful, then to binding arbitration in Bergen County, New Jersey. This provision is subject to applicable state law. |
| v. | Choice of forum | 7.5, 7.6 | All mediation, arbitration and, if applicable, litigation proceedings must be conducted in, or closest to, State court of general jurisdiction that is within or closest to Bergen County, New Jersey. This provision is subject to applicable state law. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–49)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, disputes related to the Multi-Unit Development Agreement must first undergo non-binding mediation. If the mediation is unsuccessful, the dispute will then proceed to binding arbitration. Both the mediation and arbitration proceedings are required to take place in Bergen County, New Jersey. However, these dispute resolution provisions are subject to applicable state law, which could potentially modify or supersede these requirements.
For a prospective Bang Cookies multi-unit developer, this means that any legal disputes with the franchisor will initially involve an attempt to resolve the issue through mediation, where a neutral third party helps facilitate a settlement. If mediation fails, the dispute will be settled through binding arbitration, where an arbitrator makes a final and legally binding decision. This process is generally faster and less expensive than traditional litigation.
The requirement for mediation and arbitration to occur in Bergen County, New Jersey, regardless of where the franchisee's territory is located, could present a significant cost and logistical burden for franchisees located far from New Jersey. Franchisees should be aware of this potential inconvenience and factor in travel and legal costs when evaluating the franchise opportunity. It is also important to consult with a legal professional to understand how applicable state laws might affect these dispute resolution procedures.
It is typical in franchising to see dispute resolution clauses mandating mediation and/or arbitration, as these methods are often viewed as more efficient and cost-effective than court litigation. However, the specific location for these proceedings can vary, and it is crucial for franchisees to understand the implications of being required to resolve disputes in a location that may be distant from their business operations.