What is the required procedure for resolving disputes with Belocal before initiating arbitration?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
.
B. Mediation. Before Franchisee and its Principals or Franchisor may bring an action against the other, the parties must first meet to mediate the dispute (except as otherwise provided below). Any such mediation shall be non-binding. Mediation shall be conducted in accordance with the American Arbitration Association ("AAA") rules for mediation of commercial disputes and held in the city in which Franchisor maintains its principal business office at the time of the mediation. The mediator must be experienced in franchising or franchise law and have no prior business or professional relationship with either party. Notwithstanding the foregoing, the parties may mutually agree on a mediator, procedures, and/or venue for mediation. The non-binding mediation provided for herein shall be commenced by the party requesting mediation ("complainant") providing written notice of the request for mediation to the party with whom mediation is sought ("respondent"). The request shall specify with reasonable particularity the matter or matters on which non-binding mediation is sought. A copy of the request shall be given by the complainant simultaneously to Franchisor if Franchisor is not a complainant or respondent. Mediation commenced under this Section 14.B. shall be concluded within sixty (60) days of the issuance of the request or such longer period as may be agreed upon by the parties in writing. All aspects of the mediation process shall be treated as confidential, shall not be disclosed to others, and shall not be offered or admissible in any other proceeding or legal action of any kind. Complainant and respondent shall each bear their own costs of mediation, and each shall bear one-half the cost of the mediator or mediation service.
C. Arbitration.
- (1) The parties agree that, to the extent that any disputes cannot be resolved directly between Franchisee and Franchisor, and following compliance with the applicable mediation requirements set forth in Section 14.B. above, any dispute, controversy, or claim arising out of, in connection with, or relating to this Agreement, and the relationships created hereby; or the formation, interpretation, breach, termination, or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, must be resolved by arbitration. The arbitration must be administered in accordance with the Commercial Rules of the AAA. There shall be one arbitrator.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, before a franchisee or Belocal can initiate a legal action against the other, they must first attempt to resolve the dispute through mediation. This mediation is non-binding and is intended to facilitate a resolution before more formal proceedings begin.
The mediation process must follow the American Arbitration Association (AAA) rules for commercial disputes and take place in the city where Belocal has its principal business office at the time of the mediation, unless both parties agree to a different location. The mediator should have experience in franchising or franchise law and must not have any prior business or professional connections with either party, although the parties can mutually agree on a mediator who does not meet these criteria.
The party requesting mediation, known as the complainant, must provide written notice to the other party, the respondent, detailing the specific issues to be mediated. A copy of this request must also be sent to Belocal if Belocal is not already involved as a complainant or respondent. The mediation process should be concluded within 60 days of the initial request, unless both parties agree to extend this period in writing. All aspects of the mediation are to be treated as confidential and cannot be disclosed or used in any other proceedings. Each party is responsible for their own costs associated with the mediation, and they must split the cost of the mediator or mediation service equally.
However, there are exceptions to this mediation requirement. Belocal can immediately pursue legal action in court, without first engaging in mediation or arbitration, for disputes related to past-due monies owed by the franchisee, issues concerning Belocal's trademarks, confidential information, client list, intellectual property, and the franchisee's covenants against unfair competition and solicitation, as well as copyrighted materials.