Before bringing an action in court, what is the first step Buildingstars and the franchisee must take to resolve a dispute?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Mediation. Before any party may bring an action in court for any controversy, dispute or claim between BUILDINGSTARS and FRANCHISEE arising from this Agreement or the franchise relationship set forth in this Agreement, the parties must first have a conference with each other to try to resolve the dispute. If this fails to bring about a resolution, the dispute will first be submitted to nonbinding mediation (the "Mediation") in St. Louis County, Missouri unless the parties mutually agree to another location. The Mediation shall be conducted in accordance with then-current AAA mediation rules (the "AAA Mediation Rules") except to the extent the AAA Mediation Rules differ from the terms of this Agreement, in which event the terms of this Agreement shall be applied. Notwithstanding the foregoing, the mediation does not have to be conducted under the AAA. BUILDINGSTARS and FRANCHISEE will select the mediator. If the parties cannot agree on the selection of a mediator, the mediation shall be conducted through the AAA who will make the selection of mediator using their rules and guidelines. The cost of the Mediation, including the mediator's fee and expenses, shall be paid by the FRANCHISEE. All negotiations and mediation proceedings (including without limitation, discovery conducted therein, as well as all statements and settlement offers made by either party or the mediator in connection with the Mediation) shall be strictly confidential, shall be considered as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and state rules of evidence, and shall not be admissible or otherwise used in connection with any court or arbitration proceeding for any purpose. The mediator may not be called as a witness in any court or arbitration proceeding for any purpose. If the parties, after a good faith effort to settle the dispute using Mediation, are unable to reach settlement, BUILDINGSTARS and FRANCHISEE agree that the dispute will be resolved according to the Sections below. Failure to submit the dispute to Mediation prior to commencing any litigation or arbitration proceeding shall be grounds for dismissal of the litigation or arbitration proceedings.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, before initiating any court action regarding a dispute, both Buildingstars and the franchisee must first participate in a conference with each other to attempt to resolve the dispute. If the conference does not lead to a resolution, the dispute must then be submitted to nonbinding mediation in St. Louis County, Missouri, unless both parties agree to an alternative location. This mediation does not necessarily have to be conducted through the AAA (American Arbitration Association).
The Buildingstars franchisee is responsible for covering the costs of the mediation, including the mediator's fees and expenses. All negotiations and mediation proceedings are to remain confidential and are considered compromise and settlement negotiations, thus inadmissible in any subsequent court or arbitration proceedings. The mediator cannot be called as a witness in any later proceedings.
If mediation fails to resolve the dispute, Buildingstars and the franchisee must then resolve the dispute according to the additional sections outlined in the franchise agreement. Failure to engage in mediation before starting litigation or arbitration can result in dismissal of those proceedings. This clause emphasizes the importance of attempting to resolve disputes amicably before resorting to more formal and costly legal actions.