What dispute resolution mechanism applies to the Body20 Payment and Performance Guarantee?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
16.2 Mandatory Pre-Litigation Mediation. Except as otherwise provided in this Section, prior to filing any proceeding to resolve any dispute based upon, arising out of, or in any way connected with this Agreement, a party must submit the dispute for mediation.
- (a) Conduct of Mediation. All parties must attend and participate in the mediation. It is the intent of the parties that mediation shall be held not later than 14 days after a written request for mediation shall have been served on the other parties. The mediation will be held before one mediator selected by the parties, and if the parties cannot agree upon the mediator, then a mediator selected by the American Arbitration Association ("AAA"). The mediation shall not last more than one day and shall be held in the metropolitan area of our thencurrent principal place of business. The mediation shall be governed by the rules of the AAA.
- (b) Post-Mediation. If we and you do not resolve our dispute, then thereafter any party may file for litigation or arbitration, as applicable in accordance with the terms of this Agreement.
- (c) Exceptions to Mediation. The obligation to mediate shall not be binding upon either party with respect to claims relating to the Marks, the non-payment or underpayment of any monies due under this Agreement, the noncompetition covenants, or requests by either party for temporary restraining orders, preliminary injunctions or other procedures in a court of competent jurisdiction to obtain interim relief when deemed necessary by such court to preserve the status quo or prevent irreparable injury pending resolution of the actual dispute.
16.3 Arbitration.
- (a) Procedure. Except as stated in Section 16.3(d) (Excepted Disputes), all disputes between you, your Affiliates, Owners, guarantors, and/or your or your Affiliates' officers, directors, and employees, on the one hand, and us, our affiliates, and/or our or our affiliates' officers, directors and employees, on the other hand, relating to this Agreement, our relationship with you, or your Studio will be resolved by binding arbitration. The arbitration proceeding shall be conducted by one arbitrator and in accordance with then-current Commercial Arbitration Rules of the AAA. All arbitration proceedings will be held at AAA's offices or other suitable offices that we select in the metropolitan area in which our principal place of business is then located.
- (b) Individual Actions. We and you agree that arbitration will be conducted on an individual, not a class-wide, basis and that an arbitration proceeding between us and you may not be consolidated with any other arbitration proceeding between us and any other person. Notwithstanding the foregoing or anything to the contrary in this Section 16.3, if any court or arbitrator determines that this prohibition on class-wide arbitration is unenforceable with respect to a dispute that otherwise would be subject to arbitration under this Section 16.3, then the parties agree that this arbitration clause shall not apply to that dispute and that such dispute will be resolved in a judicial proceeding in accordance with Section 16.3(d) (Excepted Disputes).
- (c) Relief. The arbitrator has the right to award or include in his or her award any relief which he or she deems proper, including money damages (with interest on unpaid
amounts from the date due), specific performance, injunctive relief, and attorneys' fees (on a solicitor and its own client basis) and costs, provided that the arbitrator may declare any Mark generic or otherwise invalid or, except as expressly provided in Section 16.5 (Mutual Waiver of Punitive Damages), award any special, consequential, exemplary, or punitive damages against either party (we and you hereby waiving to the fullest extent permitted by law, except as expressly provided in Section 16.5 below, any right to or claim for any special, consequential, exemplary, or punitive damages against the other).
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, disputes related to the Payment and Performance Guarantee are subject to both mandatory pre-litigation mediation and arbitration. Before initiating any legal proceedings, the parties involved must first submit the dispute to mediation, as detailed in Section 16.2. This mediation should occur within 14 days of a written request and be conducted by a mediator selected by the parties or, if they cannot agree, by the American Arbitration Association (AAA). The mediation is set to last no more than one day and take place in the metropolitan area of Body20's principal place of business.
If mediation fails to resolve the dispute, Section 16.3 stipulates that binding arbitration will be used to resolve disputes between the franchisee, their affiliates, owners, guarantors, and Body20, its affiliates, and their respective officers, directors, and employees. The arbitration will be conducted by a single arbitrator following the Commercial Arbitration Rules of the AAA, and proceedings will be held at AAA offices or other suitable locations selected by Body20 in the metropolitan area of its principal business location.
It is important to note that arbitration will be conducted on an individual basis, not as a class-wide action, unless a court or arbitrator deems the prohibition on class-wide arbitration unenforceable. The arbitrator has the authority to award various forms of relief, including money damages, specific performance, injunctive relief, and attorneys' fees, but is restricted from declaring any Body20 mark invalid or awarding special, consequential, exemplary, or punitive damages, except as expressly provided in Section 16.5 regarding the mutual waiver of punitive damages.
Certain disputes are exceptions to the mediation requirement, including claims relating to Body20's marks, non-payment or underpayment of monies due, non-competition covenants, or requests for temporary restraining orders or preliminary injunctions to preserve the status quo or prevent irreparable injury. These exceptions allow Body20 to seek immediate legal remedies in specific situations without first undergoing mediation.