Does Bft require mediation for dispute resolution before arbitration or litigation?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
ate of California, without regard to its conflicts of laws rules, except that the provisions regarding competitive activities shall be interpreted and enforced in accordance with the laws of the state in which the Development Area is located. The Parties further acknowledge and agree that the adoption of California law in this Section is not intended to circumvent or, in any manner, satisfy any jurisdictional requirements contained in any such laws that are expressly and specifically directed to the offer or sale of franchises or the relationships between franchisors and franchisees.
- B. Internal Dispute Resolution.The Parties each agree that, except as set forth in Section 12.E below, before it (or any of its parents, affiliates, or subsidiaries, or their respective owners, officers, directors, employees, or representatives) initiates an arbitration or litigation against the other Party (or any of the other Party's parents, affiliates, or subsidiaries, or their respective owners, officers, directors, employees or representatives), the Party initiating arbitration or litigation will provide the other Party with written notice of the underlying claim or dispute specifying, in detail, the precise nature and grounds of the claim or dispute. Within thirty (30) days after delivery of such claim or dispute, the Parties will use good faith efforts to discuss and resolve the claim or dispute informally for a reasonable period which shall be no more than sixty (60) days unless mutually extended by the Parties. The Parties must personally participate in the informal dispute resolution conference. The statute of limitations and any arbitration filing fee deadlines shall be tolled while the Parties engage in the internal dispute resolution process described in this Section.
- C. Mediation.Except as provided in Section 12.E below, the Parties agree to submit any claim or dispute that they are unable to resolve informally, as described in Section 12.B above, to mediation to be conducted by JAMS using its then-current mediation rules and procedures (see www.jamsadr.com/mediation) and to take place at Franchisor's or, as applicable, Franchisor's successor's or assign's, then-current principal place of business (currently, Irvine, California), or via a videoconferencing platform, if both Parties agree. Each Party will bear its own costs in participating in the mediation, and Franchisor and Developer will share JAMS' and the mediator's fees and costs equally. Neither Party will be required to mediate for more than one (1) day.
- D. Mandatory Binding Arbitration.If Franchisor waives the obligation to mediate (as described in Section 12.C) or the informal dispute processes described in Sections 12.B and 12.C do not resolve the claim or dispute to the Parties' satisfaction, all controversies, disputes, or claims between Franchisor, or any of its parents, affiliates, and subsidiaries, and its and their respective owners, officers, directors, agents, and employees (the "Franchisor Parties"), on the one hand, and Developer, or any of its parents, affiliates, and subsidiaries, and its and their respective owners, guarantors, officers, directors, agents, and employees (the "Developer Parties"), on the other hand, arising out of or related to: (1) this Agreement or any other agreement between any of the Franchisor Parties and Developer Parties; (2) the relationships between any Franchisor Parties and Developer Parties; (3) the scope or validity of this Agreement or any other agreement referenced in clause (1) above or any provision of any of such agreements (including the validity and scope of the arbitration provision under this Section, which Franchisor and Developer acknowledges is to be determined by an arbitrator, not a court); or (4) any System Standard, must be submitted for binding arbitration, on demand of either Party, to JAMS. If any Party initiates arbitration or files any counterclaim, it must submit a personally-signed verification therewith.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, Bft requires both internal dispute resolution and mediation before initiating arbitration or litigation, with some exceptions. Before starting arbitration or litigation against Bft, a franchisee must provide written notice detailing the claim or dispute. The parties then agree to attempt to resolve the issue informally for up to 60 days. Franchisees must personally participate in this informal dispute resolution.
If the informal process does not resolve the issue, Bft requires the parties to submit to mediation conducted by JAMS, using their current mediation rules and procedures. This mediation will take place at Bft's principal place of business in Irvine, California, or via videoconference if both parties agree. Each party bears its own costs for participating in the mediation, while the fees and costs of JAMS and the mediator are shared equally between Bft and the franchisee. Neither party is required to mediate for more than one day.
However, Bft does not require these steps before seeking injunctive or other equitable relief in court to protect its trademarks or proprietary information. Bft can waive the obligation to mediate, in which case the parties can proceed directly to mandatory binding arbitration. If these informal dispute processes do not resolve the claim to the parties' satisfaction, either party can demand binding arbitration through JAMS.
This multi-step dispute resolution process, including internal resolution, mediation, and then arbitration, is a fairly common approach in franchising. It aims to resolve disputes efficiently and economically before resorting to costly and time-consuming litigation. Franchisees should be aware of these requirements and the associated costs when considering a Bft franchise.