What is the confidentiality requirement for the mediation process between Black Bear Diner and the franchisee?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
If the dispute remains unresolved after the face-to-face meeting, the parties agree to submit the dispute to non-binding mediation conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association ("AAA"), unless the parties agree on alternative rules. The mediator must be a neutral person agreed upon by the parties and experienced in franchising. Any party may be represented by counsel and persons authorized to settle the dispute must attend any mediation session. The fees and expenses of the mediator shall be shared equally by the parties. The entire mediation process shall be confidential and the conduct, statements, promises, offers, views and opinions of the mediator and the parties shall not be discoverable or admissible in any legal proceeding for any purpose; provided, however, that evidence which is otherwise discoverable or admissible shall not be excluded from discovery or admission as a result of its use in the mediation. The parties agree to participate in the mediation proceedings in good faith with the intention of resolving the dispute if at all possible within 30 days of the notice from the party seeking to initiate the mediation procedures.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, the entire mediation process between the franchisor and franchisee is to be held confidential. This means that all conduct, statements, promises, offers, views, and opinions expressed by the mediator and the parties involved during mediation are not discoverable or admissible in any legal proceeding.
However, there is an important exception to this confidentiality. Any evidence that was already discoverable or admissible before the mediation does not become protected simply because it was used during the mediation process. In other words, parties cannot shield pre-existing evidence from discovery or admission by introducing it in mediation.
This confidentiality provision aims to encourage open and honest communication during mediation, without fear that statements made during the process will be used against either party in future litigation. This is a fairly standard practice in franchise agreements, as it promotes a more collaborative approach to dispute resolution.