Is the mediation process for Buildingstars franchise disputes binding?
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 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the mediation process is nonbinding. Before a franchisee or Buildingstars can initiate a court action regarding a dispute, they must first attempt to resolve it through a conference. If that fails, the dispute must be submitted to nonbinding mediation in St. Louis County, Missouri, unless both parties agree to a different location.
The mediation will follow the American Arbitration Association (AAA) mediation rules, unless those rules conflict with the franchise agreement, in which case the agreement prevails. While the mediation doesn't have to be conducted through the AAA, Buildingstars and the franchisee will select the mediator. If they can't agree, the AAA will choose the mediator according to their rules. The franchisee is responsible for covering the costs of the mediation, including the mediator's fees and expenses.
All negotiations and mediation proceedings are to be kept strictly confidential and are considered compromise and settlement negotiations, inadmissible in any court or arbitration proceeding. The mediator cannot be called as a witness in any proceeding. If mediation fails to resolve the dispute, Buildingstars and the franchisee agree to resolve the dispute according to other sections outlined in the franchise agreement. Failure to participate in mediation before starting litigation or arbitration can result in dismissal of those proceedings. However, Buildingstars is not obligated to mediate claims relating to its trademarks, service marks, patents, or copyrights; claims relating to any lease or sublease of any real property between the parties; 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.