Does the requirement for non-binding mediation apply to disputes concerning the Bang Cookies System?
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 the Bang Cookies System are generally subject to a prerequisite of non-binding mediation. Before either party can initiate arbitration regarding any dispute arising from the Franchise Agreement or the relationship between the franchisor and franchisee, including those related to the System, 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 its rules for commercial disputes. The mediation proceedings are to take place in Bergen County, New Jersey, or the closest suitable location if facilities are unavailable there. A single mediator will preside, selected either by mutual agreement of Bang Cookies and the franchisee or by the AAA. The mediation must occur within 45 days of the mediator's designation, unless both parties agree to a longer period in writing.
However, there are exceptions to this mediation requirement. Bang Cookies has the option to waive the mediation prerequisite for claims or disputes concerning a breach of the Franchise Agreement by the franchisee that could entitle Bang Cookies to injunctive relief. Additionally, the mediation requirement does not apply to claims related to the failure to pay fees or other monetary obligations under the Franchise Agreement, whether the claim is brought by Bang Cookies or the franchisee.
This means that while Bang Cookies encourages initial mediation for most disputes, it retains the right to immediately pursue other legal avenues, such as arbitration or injunctive relief, in specific situations. For a prospective franchisee, this highlights the importance of understanding the circumstances under which mediation can be bypassed and the potential for quicker legal action by Bang Cookies in certain cases. Franchisees are responsible for their own costs associated with the mediation.