Does the requirement for non-binding mediation apply to disputes related to the Bee Organized system?
Bee_Organized Franchise · 2025 FDDAnswer from 2025 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 Johnson County, Kansas, or, if suitable AAA facilities are not available in Johnson County, Kansas, then at a suitable AAA location selected by the arbitrator that is located closest to Johnson County, Kansas. In connection with binding arbitration, Franchisor and Franchisee further agree that:
- (a) All matters relating to arbitration, will be governed by the United States Federal Arbitration Act, except as expressly or otherwise set forth in this Agreement;
- (b) The arbitration hearing shall be conducted within 180 days of the demand for arbitration;
- (c) The arbitrator shall render written findings of fact and conclusions of law;
- (d) Except as may be otherwise required and/or prohibited by this Agreement including, but not limited to Articles 18.I., 18.J., 18.N., 18.O., 18.R., 18.T., and 18.X. of this Agreement, the arbitrator has the right to award or include in his or her award any relief that he or she determines to be proper, including monetary damages, interest on unpaid sums, specific performance, injunctive relief,
Source: Item 23 — RECEIPTS (FDD pages 54–218)
What This Means (2025 FDD)
According to Bee Organized's 2025 Franchise Disclosure Document, disputes related to the Bee Organized system are generally subject to non-binding mediation before either party can pursue arbitration. Specifically, the FDD states that before bringing any action related to the Franchise Agreement or the franchise relationship to arbitration, both the franchisee and Bee Organized must first attempt to mediate the dispute. This mediation is non-binding and is to be conducted through the American Arbitration Association (AAA) following their rules for commercial disputes. Unless otherwise agreed to in writing, the mediation proceedings will take place in Johnson County, Kansas, or as close as possible if a mediator isn't available there. If Bee Organized and the franchisee cannot agree on a mediator, the AAA will select one. The mediation must occur within 45 days of the mediator's designation.
Both Bee Organized 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, there are exceptions to this mediation requirement. Bee Organized can elect to bypass mediation for claims related to a breach of the Franchise Agreement by the franchisee that could entitle Bee Organized to injunctive relief, including violations of Article 6 of the agreement. Additionally, claims related to the failure to pay fees or other monetary obligations under the agreement are also exempt from the non-binding mediation requirement at Bee Organized's election.
For franchisees in Maryland and Illinois, there are specific amendments to the franchise agreement that may affect dispute resolution. The Maryland amendment clarifies that a franchisee may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law, regardless of the arbitration clause. The Illinois amendment states that Illinois law governs the agreements and that any provision designating jurisdiction or venue outside of Illinois is void, although arbitration outside Illinois is permitted. These amendments highlight the importance of understanding state-specific franchise laws and how they modify the standard Bee Organized franchise agreement. Prospective franchisees should carefully review these amendments and consult with legal counsel to understand their rights and obligations in their specific state.