What is the condition for a party to commence or maintain a court action or proceeding upon a dispute in connection with the Chatime agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (12) Despite anything in this clause 14, a party at any time may commence court proceedings in relation to any dispute or claim arising under or in connection with this Agreement solely for the purpose of obtaining urgent interlocutory relief pending resolution of the Arbitration.
- (13) Subject to this clause 14, a party must not commence or maintain a court action or proceeding upon a dispute in connection with this Agreement if the dispute is referred to arbitration under this clause 14.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a party is restricted from starting or continuing a court action regarding a dispute connected to the Franchise Agreement if the dispute is undergoing arbitration as specified in the agreement. This clause emphasizes the importance of adhering to the arbitration process for dispute resolution.
However, there is an exception to this rule. A party can initiate court proceedings to seek urgent interlocutory relief while the arbitration is still pending. This allows for immediate legal intervention to protect a party's interests while the arbitration process continues to resolve the underlying dispute.
This condition means that franchisees must first pursue arbitration for most disputes before turning to the courts, potentially saving time and money. However, franchisees retain the right to seek immediate court intervention for urgent matters needing quick resolution, ensuring that their legal rights are protected during the arbitration process.