What rules govern dispute resolution for a Chatime franchise agreement?
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. |
|---|---|---|
| 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 | |
| v. Choice of forum | §16 | Arbitration in New York in accordance with the rules of the AAA service. These provisions are subject to state law. |
| MDA: §14 | Arbitration in New York in accordance with the rules of the AAA service. These provisions are subject to state law. | |
| w. Choice of law | §25.1 MDA: §23.16 | Delaware law. These provisions are subject to state law. Delaware law. 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, dispute resolution for both the Franchise Agreement (FA) and the Multi-Unit Development Agreement (MDA) involves mediation or arbitration in New York, following the rules of the American Arbitration Association (AAA). This applies to all disputes and claims related to the Franchise Agreement or the relationship between the parties, unless otherwise specified. These dispute resolution provisions are subject to state law.
Specifically, the FDD indicates that the choice of forum for arbitration is New York, and this too is governed by the rules of the AAA service and is subject to state law. Furthermore, the governing law for both the Franchise Agreement and the Multi-Unit Development Agreement is Delaware law, but these provisions are also subject to state law.
In practical terms, this means that if a Chatime franchisee has a dispute with the franchisor, they will likely need to engage in mediation or arbitration rather than directly pursuing a lawsuit. The location for these proceedings will be in New York, which may require the franchisee to travel and incur associated costs. The rules and procedures of the American Arbitration Association will dictate how the mediation or arbitration is conducted. While Delaware law governs the agreements, state law can also influence the interpretation and enforcement of these provisions. Prospective franchisees should consult with an attorney to understand the full implications of these dispute resolution terms and how they may be affected by their specific circumstances and location.