Who bears the costs of the Chatime mediation?

According to Chatime's 2025 Franchise Disclosure Document, in the event that a dispute arises and proceeds to mediation, the costs of the mediation itself will be shared equally between the parties involved, meaning the franchisee and Chatime. However, each party is individually responsible for covering their own expenses related to attending and preparing for the mediation, such as legal representation, travel, and accommodation.

This arrangement is fairly standard in franchise agreements, as it ensures that both parties have a vested interest in resolving the dispute efficiently and cost-effectively. By splitting the direct costs of the mediator, Chatime and the franchisee share the financial burden of the process.

It is important to note that this cost-sharing arrangement applies specifically to mediation. If the mediation is unsuccessful and the dispute proceeds to arbitration, a different set of rules regarding cost allocation may apply. The FDD states that the mediator does not have the power to make any decision binding on the parties to resolve the dispute.

Prospective Chatime franchisees should carefully consider these dispute resolution procedures and associated costs, as they could potentially represent a significant expense in the event of a disagreement with the franchisor.