Are the Franchisor and Franchisee each responsible for their own costs associated with mediation in a Casiola franchise dispute?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
(1) Non-Binding Mediation – Franchisee and Franchisor agree that before either party may bring any action, dispute and/or controversy arising from or related to this Agreement and/or the franchise relationship between Franchisor and Franchisee in arbitration, the parties must first mediate the dispute through non-binding mediation. Mediation shall be non-binding and shall be conducted by the American Arbitration Association ("AAA") in accordance with AAA's then current rules for the mediation of commercial disputes. All mediation proceedings shall be conducted in Orange County, Florida or, if a mediator is not available in Orange County, Florida, then at a suitable location selected by the mediator that is located closest to Orange County, Florida. Mediation shall be conducted by one mediator and if Franchisor and Franchisee cannot agree on a mediator then the mediator shall be selected by AAA. Mediation shall be conducted within 45 days of AAA's designation and/or acknowledgment of the selected mediator or such longer period as may be agreed to between Franchisor and Franchisee in writing and signed by each respective party. Franchisor and Franchisee shall each be responsible for their own costs associated with mediation and Franchisor and Franchisee shall each be responsible for and shall each pay 50% of the mediator's fee and AAA's mediation fees.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, in the event of a dispute requiring mediation, both the franchisee and Casiola will bear their own costs. Additionally, the franchisee and Casiola will each be responsible for 50% of the mediator's fees and any associated fees from the American Arbitration Association (AAA). This applies before either party can pursue arbitration related to the franchise agreement.
Mediation is required before arbitration and will be conducted by the AAA following their rules for commercial disputes. Unless otherwise agreed in writing, the mediation will take place in Orange County, Florida, or a location selected by the mediator near Orange County if a mediator isn't available there. The mediation must occur within 45 days of the AAA's mediator designation, unless both parties agree to a longer period in writing.
This arrangement is fairly standard in franchising, where both parties typically cover their legal and related expenses during dispute resolution processes like mediation. Sharing the mediator's fees equally is also a common practice, intended to encourage both parties to engage constructively in the mediation process. Franchisees should factor these potential costs into their financial planning, as disputes can arise, and mediation is a mandatory step before arbitration.