Where can I find information about dispute resolution in the Buildingstars Franchise Agreement?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
XV. DISPUTE RESOLUTION
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.
[Item 22: CONTRACTS]
Notwithstanding the foregoing, the obligation of this Section to mediate will not be binding with respect to claims brought by BUILDINGSTARS and relating to BUILDINGSTARS's trademarks, service marks, patents, or copyrights, including the Marks; claims relating to any lease or sublease of any real property between the parties or their affiliated entities; or requests by BUILDINGSTARS for temporary restraining orders, preliminary injunctions, permanent injunctions or other proceedings in a court of competent jurisdiction to obtain interim or permanent relief when deemed necessary by such court to preserve the status quo or prevent irreparable injury pending resolution of the actual dispute between the parties.
B. Litigation. Except as otherwise provided in this Agreement, all controversies, disputes or claims between BUILDINGSTARS and FRANCHISEE arising from this Agreement or the franchise relationship set forth in this Agreement shall be filed in the Federal District Court in St. Louis, MO when
the grounds set forth in 28 U.S.C.§ 1332 are present. Both parties and each guarantor of this Agreement irrevocably submit to the jurisdiction of this court and waive any objection to the application of Missouri law or to the jurisdiction or venue in this court. In the event that the above-referenced federal court does not have jurisdiction over the dispute, the parties shall submit to binding arbitration as provided below.
Notwithstanding the foregoing, any claims BUILDINGSTARS has relating to its trademarks, service marks, patents, or copyrights, including the Marks; claims relating to any lease or sublease of any real property between the parties or their affiliated entities; or requests by BUILDINGSTARS for temporary restraining orders, preliminary injunctions, permanent injunctions or other proceedings in a court of competent jurisdiction to obtain interim or permanent relief when deemed necessary by such court to preserve the status quo or prevent irreparable injury pending resolution of the actual dispute between the parties shall be brought in either federal or state courts in St. Louis County, MO. Both parties agree to submit to the jurisdiction of the state and federal court in St. Louis County, MO.
[Item 22: CONTRACTS]
C. Arbitration. In the event that the federal court described above does not have subject matter jurisdiction over the dispute, the parties, subject to all other provisions above, will submit the dispute to binding arbitration conducted in St. Louis County, MO (unless the parties mutually agree otherwise). The arbitration proceeding will be conducted in accordance with the then current commercial arbitration rules of the American Arbitration Association ("AAA Rules"), except to the extent the AAA Rules differ from the terms of this Agreement, in which event the terms of this Agreement will apply. Notwithstanding the foregoing, the arbitration does not have to be conducted under the AAA. The arbitrator must be mutually selected by the parties and must have at least 5 years of substantial experience in franchise law. Each party will be limited to 25 document requests, 15 interrogatories and 1 deposition unless otherwise agreed to between the parties. For purposes of this Section, if any dispute that names, involves or includes BUILDINGSTARS, it respective affiliates, officers, directors, agents, brokers or employees, such persons or entities shall also be included in and made party to the arbitration proceeding to the extent such parties consent to proceeding forward in arbitration.
[Item 22: CONTRACTS]
provision will continue in full force and effect subsequent to and notwithstanding the Transfer, or the termination or expiration of the term of this Agreement. Except as provided in subsection A. above, the arbitration will be conducted on an individual, not a class-wide basis. None of the parties to the arbitration will be entitled to consolidation of the arbitration proceedings with the proceedings of any third party, nor will the arbitrator or any court be empowered to order a consolidation of proceedings with any third party.
D. Dispute Resolution Fee. In the event that the FRANCHISEE or its guarantors have not complied with the provisions in this Section on Dispute Resolutions, FRANCHISEE shall reimburse BUILDINGSTARS for all of its expenses incurred in curing the FRANCHISEE's breach (including, without limitation, BUILDINGSTARS's attorneys' fees and costs related to dismissing and responding to any improperly filed claim) and pay the BUILDINGSTARS a Dispute Resolution Fee of $50,000 ("Dispute Resolution Fee"). FRANCHISEE acknowledges and agrees that the BUILDINGSTARS will be damaged by such breach. FRANCHISEE agrees that a precise calculation of the full extent of the damages that BUILDINGSTARS will incur from the breach of the Dispute Resolution provisions of this Agreement are difficult to determine and all parties desire certainty in this matter and agree that the Dispute Resolution Fee provided herein is reasonable and constitute liquidated damages and not a penalty. BUILDINGSTARS has the right to collect these amounts in addition to exercising any and all other rights BUILDINGSTARS may have for non-compliance under this Agreement.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, Item 22, "Contracts," details the dispute resolution process. Before initiating any court action regarding disputes arising from the Franchise Agreement, both Buildingstars and the franchisee must first attempt to resolve the issue through a conference. If this is unsuccessful, the dispute must be submitted to nonbinding mediation in St. Louis County, Missouri, unless both parties agree to an alternative location. The mediation will follow the American Arbitration Association (AAA) mediation rules, although the mediation doesn't have to be conducted under the AAA. The franchisee is responsible for covering the costs of the mediation, including the mediator's fees and expenses. Failure to submit the dispute to mediation before starting litigation or arbitration can result in dismissal of those proceedings.
If mediation fails, the FDD outlines further steps for dispute resolution. Except for certain claims like those related to Buildingstars's trademarks or intellectual property, or requests for injunctive relief, disputes will be filed in the Federal District Court in St. Louis, MO, if the grounds in 28 U.S.C. § 1332 are met. Both parties must submit to this court's jurisdiction and waive objections to Missouri law or venue. If the federal court lacks jurisdiction, the dispute will proceed to binding arbitration in St. Louis County, MO, unless otherwise agreed. The arbitration will follow AAA rules, with an arbitrator who has at least five years of franchise law experience, selected mutually by both parties.
The Buildingstars Franchise Agreement also specifies a "Dispute Resolution Fee." If a franchisee fails to comply with the dispute resolution provisions, they must reimburse Buildingstars for all expenses incurred in addressing the breach, including attorney's fees, and pay a $50,000 Dispute Resolution Fee. Buildingstars considers this fee as liquidated damages, not a penalty, acknowledging the difficulty in precisely calculating damages from a breach of the dispute resolution terms. This fee is in addition to any other rights Buildingstars may exercise for non-compliance under the Agreement. These provisions ensure a structured approach to resolving conflicts, with initial emphasis on mediation and clear financial consequences for non-compliance with the outlined procedures.