Does the non-binding mediation requirement apply to claims related to a breach of the Bang Cookies agreement by the Franchisee that may entitle the Franchisor to injunctive relief?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Notwithstanding the preceding paragraph, Franchisor and Franchisee agree this Sub-Article 18.G.(1) and, thereby, the prerequisite requirement of non-binding mediation, shall not, at Franchisor's election, apply to: (a) any claims or disputes related to or concerning a breach of this Agreement by Franchisee that, under the terms of this Agreement, may entitle Franchisor to the award of injunctive relief including, but not limited to, Franchisee's violation or purported violation of Article 6 of this Agreement; and/or (b) claims by either Franchisor or Franchisee under this Agreement that relates to either Franchisor's or Franchisee's failure to pay fees or other monetary obligations due under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the requirement for non-binding mediation does not automatically apply to claims related to a breach of the Franchise Agreement by the franchisee if the breach could entitle Bang Cookies to injunctive relief. Bang Cookies has the option to elect not to engage in non-binding mediation in such cases. This means that Bang Cookies can directly pursue other legal avenues, such as arbitration or court proceedings, to seek injunctive relief without first going through mediation. This applies to violations of Article 6 of the agreement. Article 6 addresses restrictive covenants and obligations.
This provision gives Bang Cookies greater flexibility in responding to breaches of the agreement that could cause immediate and irreparable harm. Injunctive relief is a court order that requires a party to stop engaging in certain conduct, and Bang Cookies may want to seek such relief quickly to protect its brand, trade secrets, or customer relationships.
For a prospective Bang Cookies franchisee, this means that in the event of a dispute where Bang Cookies seeks injunctive relief, the franchisee may not have the opportunity to resolve the issue through mediation before legal action is taken. It is important for franchisees to understand the circumstances under which Bang Cookies may seek injunctive relief and to comply with the terms of the Franchise Agreement to avoid such situations.
It is also important to note that this exception to the mediation requirement is at Bang Cookies's election, meaning they can still choose to pursue mediation even if the breach could entitle them to injunctive relief. Franchisees should seek legal counsel to fully understand their rights and obligations under the Franchise Agreement and to assess the potential implications of this provision.