Does the Buildingstars franchise agreement allow for discovery during mediation?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
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 23 — RECEIPT (FDD pages 43–217)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the franchise agreement outlines a mediation process to resolve disputes before court actions. The agreement specifies that all negotiations and mediation proceedings, including any discovery conducted within them, are to be kept strictly confidential. This confidentiality extends to all statements and settlement offers made by either party or the mediator during the mediation.
This means that any information obtained or disclosed during the mediation process, including through discovery, cannot be used in any subsequent court or arbitration proceedings. The purpose is to encourage open and honest communication during mediation without fear that the information shared could be used against a party later on. The mediator is also protected from being called as a witness in any future proceedings.
For a prospective Buildingstars franchisee, this clause ensures that the mediation process remains a safe space for negotiation. However, it also means that any information learned during discovery in mediation cannot be leveraged in later legal actions if mediation fails. Franchisees should be aware of this limitation and consider its implications when deciding how to approach mediation and what information to share during the process.