Does the Chatime mediator have the power to make a binding decision?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.1 Notice of Dispute. If a dispute arises relating to or in connection with this Agreement or the relationship of the parties ("Dispute"), a party to the Dispute must give to the other party or parties to the dispute notice specifying the dispute and requiring its resolution under this clause 16 ("Notice of Dispute").
- 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.
- 16.3 Arbitration.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the mediator in a dispute resolution process does not have the authority to make decisions that are binding on either party. If a dispute arises, either party can refer the matter to a mediator after a 30-day period following a Notice of Dispute. If the parties cannot agree on a mediator, the American Arbitration Association (AAA) will appoint one.
The mediation process, which can occur via videoconference, aims to resolve the dispute through the parties' reasonable efforts. All discussions and documents created for mediation are confidential and cannot be used in later litigation. The costs of mediation are shared equally, while each party bears its own expenses for attending and preparing for the mediation.
Since the mediator's decisions are non-binding, if mediation fails, the dispute will be resolved through binding arbitration. This arbitration is governed by the Federal Arbitration Act and the Commercial Arbitration Rules of the AAA, and it will take place in New York, New York, unless both parties agree otherwise. This means that while mediation is a required step, it serves primarily as a means of attempting to resolve disputes amicably before resorting to a legally binding decision through arbitration.