According to the Chatime MDA, where must disputes be settled through mediation or arbitration?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| u. Dispute resolution by arbitration or mediation | §16 | Except as otherwise provided, all disputes and claims relating to your Franchise Agreement or the relationship of the parties must be settled by mediation or arbitration in New York in accordance with the rules of the American Arbitration Association ("AAA") mediation and arbitration service. These provisions are subject to state law. |
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| MDA: §14 | Except as otherwise provided, all disputes and claims relating to your MDA or the relationship of the parties must be settled by mediation or arbitration in New York in accordance with the rules of the AAA mediation and arbitration service. These provisions are subject to state law |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 43–52)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, disputes and claims relating to the Multi-Unit Development Agreement (MDA) or the relationship between the parties must be settled through mediation or arbitration in New York. This process will follow the rules established by the American Arbitration Association (AAA). However, these dispute resolution provisions are subject to state law, which means that specific state laws may impact or modify how these provisions are applied.
This means that if a dispute arises between a Chatime multi-unit developer and the franchisor, the initial steps to resolve the issue—mediation or arbitration—must take place in New York, regardless of where the franchisee's business is located. This could involve travel and associated costs for the franchisee. The application of AAA rules ensures a structured and recognized process for resolving disputes.
It's important to note that while the initial dispute resolution forum is specified as New York, the substantive law governing the MDA is Delaware law, as indicated elsewhere in the FDD. Franchisees should be aware of the potential costs and logistical challenges associated with mandatory mediation or arbitration in a specific location. Prospective franchisees should consult with a legal professional to understand the full implications of these dispute resolution provisions and how they interact with state laws.