In the event of a dispute with Chicken Guy, what initial steps are the parties obligated to take?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Mediation. Except as provided with respect to injunctive relief as set forth in this Agreement, in the event of any dispute arising from or in connection with this Agreement or the breach thereof or the relationship of the parties, the parties shall use their best efforts to settle the dispute by consulting and negotiating with each other in good faith to attempt to reach a solution satisfactory to both parties. If these methods fail, Chicken Guy and Franchisee agree to submit any claim, controversy, or dispute arising out of this Agreement or the relationship of the parties to non-binding mediation conducted by the American Arbitration Association (the "AAA") and in accordance with its then-current rules for
commercial mediation. Once either party has submitted a dispute to mediation, the obligation to attend will be binding on both parties. Both parties must sign a confidentiality agreement before participating in any mediation proceeding. The mediation will take place in the city where Chicken Guy's principal offices are located at the time the demand for mediation is filed. If a dispute cannot be resolved through mediation, the parties agree to submit the dispute to arbitration, subject to the terms and conditions of Section 31.B.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, in the event of a dispute, both parties are obligated to first attempt to resolve the issue through good-faith negotiation. If negotiation fails, Chicken Guy and the franchisee must submit the dispute to non-binding mediation conducted by the American Arbitration Association (AAA), following its commercial mediation rules.
Submitting to mediation becomes a binding obligation for both parties once either party initiates the process. Prior to participating in mediation, both parties are required to sign a confidentiality agreement. The mediation will be held in the city where Chicken Guy's principal offices are located when the mediation demand is filed.
If mediation does not resolve the dispute, the parties are then obligated to submit the dispute to binding arbitration, also under the rules of the AAA. However, Chicken Guy can seek injunctive relief for breaches or threatened breaches of the agreement, such as those involving confidential information or the use of proprietary marks, without first going through mediation or arbitration, although they must contemporaneously submit the disputes for non-binding mediation and then for arbitration if mediation is unsuccessful.