Under the Chatime MDA, what rules govern arbitration?
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. |
| 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 | Delaware law. These provisions are subject to state law. |
| MDA: §23.16 | 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, disputes related to the Multi-Unit Development Agreement (MDA) are subject to specific arbitration rules. Except as otherwise provided, all disputes and claims relating to the MDA or the relationship of the parties must be settled by mediation or arbitration in New York. This arbitration will be conducted in accordance with the rules of the American Arbitration Association (AAA) mediation and arbitration service. These provisions are subject to state law.
This means that if a Chatime multi-unit developer has a disagreement with Chatime that cannot be resolved informally, the dispute will be settled through either mediation or arbitration, both of which will take place in New York. The AAA's rules will govern the process, providing a structured framework for resolving the conflict. However, the application of these rules is subject to any relevant state laws that may affect the arbitration process.
For a prospective Chatime franchisee, it is important to understand that any legal disputes arising from the MDA will likely need to be addressed through arbitration in New York, which could involve travel and legal expenses. The outcome of arbitration can be binding, so it's crucial to be aware of the implications and to seek legal counsel when entering into the MDA. Franchisees should also be aware that Delaware law governs the MDA.