Is mediation a required step before arbitration for disputes related to the Buona Franchise Agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Do you understand all disputes or claims you may have arising out of or relating to the Franchise Agreement must be arbitrated in Illinois, if not resolved informally or by mediation?
Except for controversies, disputes or claims related to or based on Franchisee's use of the Marks or Confidential Information, Franchisee's compliance with its noncompetition obligations and any rights Franchisor may have to possession of the premises of the Franchised Business under any sublease, lease or collateral assignments, all controversies, disputes or claims between Franchisor, its affiliates, and their respective owners, officers, directors, agents, employees and attorneys, and Franchisee (its affiliates and owners and guarantors, if applicable), arising out of or related to this Agreement or any other agreement between the parties; the parties' rights and obligations under this Agreement; Franchisor's relationship with Franchisee or the obligations by and between the parties; or the validity of this Agreement or any other agreement between Franchisor and Franchisee or any provision of such agreements, will be submitted to binding Arbitration administered by the American Arbitration Association ("AAA") in accordance with the AAA's thencurrent Commercial Arbitration Rules. The arbitration hearing shall take place in Cook County, Illinois, before a single arbitrator. Any party who fails or refuses to submit any dispute to binding arbitration following a lawful demand by the opposing party shall bear all costs and expenses incurred by the opposing party in compelling arbitration. The parties shall have thirty days after the service of a Statement of Claim and demand for arbitration to agree on a single arbitrator. If the parties cannot
agree on a single arbitrator, the matter will be filed with and administered by the AAA, or if AAA is not available, any comparable arbitration body.
Notwithstanding the foregoing, Franchisor shall have no obligation to mediate claims that are the subject of Paragraph 12.2 herein.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, mediation is generally required before arbitration, but there are exceptions. Specifically, for disputes or claims related to the franchisee's use of the Marks or Confidential Information, the franchisee's compliance with noncompetition obligations, and any rights Buona may have to possession of the premises under any sublease, lease, or collateral assignments, arbitration is required.
For all other controversies, disputes, or claims between Buona and the franchisee arising out of or related to the Franchise Agreement, the parties must first attempt to resolve the issue informally or through mediation. If these methods fail, the dispute will be submitted to binding arbitration administered by the American Arbitration Association (AAA) in Cook County, Illinois. The parties have 30 days after a Statement of Claim to agree on a single arbitrator. If they cannot agree, the AAA or a comparable arbitration body will administer the process.
Buona is not obligated to mediate claims that are the subject of Paragraph 12.2, which pertains to specific performance and injunctive relief. This includes actions by Buona to enforce provisions related to the use of Marks, non-disclosure, non-competition, and to prevent actions that violate laws or harm the goodwill associated with the Marks. In these specific cases, Buona can seek injunctive relief without being required to mediate.