What rules govern dispute resolution for a Chatime multi-unit development agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise | Summary |
|---|---|---|
| Agreement (FA) and Multi-Unit Development Agreement (MDA) | ||
| a. Length of the | FA: §1.1(27) | The term is ten years. |
| franchise term | ||
| MDA: §1.1(34) | The period ending the end date of the agreed Development Period. . | |
| b. Renewal or extension of the term | FA: §1.1(40); §2.6 | At the end of the initial term of your Franchise Agreement, we may grant you the option to continue operating as a franchisee in your Territory and to enter into a new Franchise Agreement for a renewal term of ten years. |
| MDA: § 2.7 | At the end of the initial term of your Franchise Agreement, you may request to enter into an additional term of ten years under the terms of our then-current form of multi-unit development agreement, which may contain different terms | |
| 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. |
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, disputes related to the Multi-Unit Development Agreement (MDA) are addressed through mediation or arbitration. Specifically, all disputes and claims relating to the MDA or the relationship between the parties must be settled through either mediation or arbitration. This process will take place in New York and will follow the rules established by the American Arbitration Association (AAA). These dispute resolution provisions are subject to state law.
This means that if a Chatime multi-unit developer has a disagreement with Chatime, they are generally required to attempt to resolve it through mediation or arbitration rather than directly through the court system. Mediation involves a neutral third party helping to facilitate a resolution, while arbitration involves a more formal process where a neutral arbitrator makes a binding decision. The location for these proceedings is set in New York, regardless of where the franchisee's Chatime locations are based.
It's important to note that these dispute resolution methods and the specific location (New York) are predetermined in the MDA. While the FDD specifies that these provisions are subject to state law, the agreement mandates mediation or arbitration in New York under AAA rules. Prospective franchisees should be aware of these requirements and consider the potential costs and logistical implications of engaging in dispute resolution in New York.