How are the costs of mediation shared between the parties in a Chatime franchise dispute?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.2 Mediation. If the parties cannot resolve their Dispute within 30 days from the date of service of the Notice of Dispute, either party may refer the matter to a mediator and if the parties cannot agree upon the appointment of a mediator, either party may submit the matter to the American Arbitration Association ("AAA") and obtain the appointment of a mediator under the AAA mediation rules from the AAA Franchise Panel.
- (1) The mediation may take place by videoconference, unless the parties agree upon a different location. The mediator may decide the date and time for mediation and the parties will attend the mediation and use reasonable endeavors to resolve the dispute.
- (2) The parties to the mediation agree that: everything that occurs before the mediator will be in confidence and in closed session; all discussions will be without prejudice; and no documents brought into existence specifically for the purpose of the mediation process will be called into evidence in any subsequent litigation by either of the parties. The mediator will deal with any matter as expeditiously as possible by no later than 30 Business Days after referral to the mediator.
- (3) The parties to the mediation will bear the costs of the mediation on an equal basis. Each party will bear its own costs of attending and preparing for the mediation.
- (4) The mediator will have no power to make any decision binding on the Parties to resolve the dispute.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the costs of mediation are shared equally between the parties involved. This means that both the franchisor and the franchisee will bear the costs of the mediation process on an equal basis. However, each party is responsible for their own costs associated with attending and preparing for the mediation, such as legal representation or travel expenses.
This arrangement is fairly standard in franchise agreements, as it ensures that neither party is unduly burdened by the costs of attempting to resolve a dispute through mediation. By splitting the mediation costs, both parties have a financial incentive to engage in the process in good faith and work towards a resolution. This can help to avoid the more costly and time-consuming process of arbitration or litigation.
It's important to note that the mediator in a Chatime franchise dispute does not have the power to make any binding decisions. The goal of mediation is to facilitate a mutually agreeable resolution between the parties. If mediation is unsuccessful, the dispute may then proceed to arbitration, as outlined in the Chatime franchise agreement.