Does the requirement for non-binding mediation apply to disputes concerning the Ancillary Agreements related to the Bang Cookies franchise?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
(2) Arbitration – Subject to the prerequisite requirements of non-binding mediation as set forth in Sub-Article 18.G.(1), and, except, at Franchisor's election, as to 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, Franchisor and Franchisee agree that all disputes, controversies, and claims, arising from and/or related to this Agreement, the relationship between Franchisor and Franchisee, the System, and/or the validity of this Agreement and/or the Ancillary Agreements, shall be submitted, on demand of either Franchisor or Franchisee, to AAA for binding arbitration. Arbitration shall be conducted by one arbitrator in accordance with AAA's then current rules for commercial disputes, except as may be otherwise required in this Article 18.G. All arbitration proceedings shall be conducted in Bergen County, New Jersey or, if suitable AAA facilities are not available in Bergen County, New Jersey then at a suitable AAA location selected by the arbitrator that is located closest to Bergen County, New Jersey.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, disputes related to Ancillary Agreements are generally subject to non-binding mediation before arbitration. Specifically, before either party can initiate arbitration for any dispute arising from the Franchise Agreement, the franchise relationship, or the Ancillary Agreements, they must first attempt to resolve the issue through non-binding mediation. This mediation is to be conducted by the American Arbitration Association (AAA) following their commercial dispute mediation rules. The mediation proceedings are to take place in Bergen County, New Jersey, or a location nearby selected by the mediator if a mediator isn't available in Bergen County.
However, there are exceptions to this mediation requirement. Bang Cookies retains the option to bypass mediation for claims or disputes concerning a breach of the Franchise Agreement by the franchisee that could entitle Bang Cookies to injunctive relief. Similarly, claims related to the failure to pay fees or other monetary obligations under the Franchise Agreement can also be exempted from the mediation requirement at Bang Cookies's discretion.
This means that while non-binding mediation is a prerequisite for most disputes, a prospective Bang Cookies franchisee should be aware that certain types of disputes, particularly those involving breaches of contract by the franchisee or failure to meet financial obligations, may proceed directly to arbitration at Bang Cookies's election. The franchisee is responsible for their own mediation costs and 50% of the mediator and AAA's fees.