Does the requirement for non-binding mediation apply to disputes concerning the validity of the Bang Cookies franchise agreement?
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.
(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 validity of the franchise agreement are generally subject to a prerequisite of non-binding mediation. Before either party can initiate arbitration regarding disputes arising from the agreement, the relationship between the franchisor and franchisee, the system, or the validity of the agreement, they must first attempt to resolve the matter 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 for Bang Cookies franchises are to take place in Bergen County, New Jersey, or, if a mediator isn't available there, at a location closest to Bergen County selected by the mediator. A single mediator will preside over the mediation, and if the parties cannot agree on a mediator, the AAA will select one. The mediation must occur within 45 days of the AAA's designation of the mediator, unless both parties agree to a longer period in writing.
Both Bang Cookies and the franchisee are responsible for their own costs associated with the mediation. They will also each pay 50% of the mediator's fee and the AAA's mediation fees. However, the requirement for non-binding mediation does not apply, at Bang Cookies's election, to claims related to a breach of the agreement by the franchisee that may entitle Bang Cookies to injunctive relief, or to claims relating to the failure to pay fees or other monetary obligations due under the agreement.