Does the Buildingstars franchise agreement require the franchisee to pay for the cost of 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, franchisees are responsible for covering the costs of mediation. Specifically, if a dispute arises between Buildingstars and the franchisee that leads to mediation, the franchisee is obligated to pay for the cost of the Mediation, including the mediator's fee and expenses. The mediation will occur in St. Louis County, Missouri, unless both parties agree to an alternative location.
This requirement means that a Buildingstars franchisee must be prepared to bear the financial burden of mediation should a dispute occur. This could include fees for the mediator's time, travel, and other associated expenses. The franchisee does have a say in selecting the mediator, but if an agreement cannot be reached, the selection will be made through the American Arbitration Association (AAA).
It is important to note that the mediation process is designed to be confidential, with all negotiations, statements, and settlement offers protected from use in any subsequent court or arbitration proceedings. However, if mediation fails to resolve the dispute, Buildingstars and the franchisee agree to resolve the dispute according to the sections outlined in the franchise agreement. Failure to engage in mediation before starting litigation or arbitration can result in dismissal of those proceedings, emphasizing the importance of adhering to the dispute resolution process outlined in the agreement.