Where in the Buildingstars Franchise Agreement can I find information regarding dispute resolution?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPT]
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 23: RECEIPT]
The arbitrator will apply the provisions of any applicable statute of limitations. In connection with any arbitration proceeding, BUILDINGSTARS and FRANCHISEE will submit or file any claim which would constitute a compulsory counterclaim (as defined by Rule 13 of the Federal Rules of Civil Procedure) within the same proceeding as the claim to which it relates. Any of these compulsory claims which are not submitted or filed in the same proceeding in which they relate will be barred. This 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.
XVI. MISCELLANEOUS PROVISIONS
- A.
Waiver.
No waiver by BUILDINGSTARS of any default of the FRANCHISEE shall constitute a waiver of any other default and shall not preclude BUILDINGSTARS from thereafter requiring strict compliance with this Agreement.
- B.
Severability.
[Item 23: RECEIPT]
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 23: RECEIPT]
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.
Source: Item 23 — RECEIPT (FDD pages 43–217)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, Item 23 covers dispute resolution. Specifically, Section XV details the process for resolving disputes between Buildingstars and its franchisees. This section mandates that before initiating any court action, both parties must first participate in a conference to attempt to resolve the dispute. If this initial conference is unsuccessful, the dispute must then be submitted to nonbinding mediation in St. Louis County, Missouri, unless both parties agree to an alternative location.
The mediation process, as outlined in the Franchise Agreement, should follow the American Arbitration Association (AAA) mediation rules, although the parties can agree to use another mediator. The franchisee is responsible for covering the costs associated with the mediation, including the mediator's fees and expenses. All communications and offers made during the mediation are confidential and inadmissible in any subsequent legal proceedings. If mediation fails to produce a settlement, the agreement specifies that disputes will be resolved through litigation or binding arbitration, depending on the nature of the claim and the jurisdiction.
The Buildingstars Franchise Agreement also stipulates specific conditions under which the obligation to mediate does not apply, such as claims relating to Buildingstars's intellectual property rights or requests for injunctive relief. Furthermore, if a franchisee fails to comply with the dispute resolution provisions, they may be required to reimburse Buildingstars for all expenses incurred in addressing the breach, including attorney's fees, and pay a Dispute Resolution Fee of $50,000 as liquidated damages. This fee underscores the importance Buildingstars places on adhering to the prescribed dispute resolution process.
In cases where federal court jurisdiction is absent, the agreement mandates binding arbitration in St. Louis County, Missouri, following AAA rules, with the arbitrator possessing at least five years of experience in franchise law. The agreement limits discovery to 25 document requests, 15 interrogatories, and 1 deposition per party, unless otherwise agreed. These measures aim to streamline the dispute resolution process and control costs. The Franchise Agreement also includes provisions regarding jurisdiction, venue, and waiver of jury trial, further defining the legal framework for resolving conflicts between Buildingstars and its franchisees.