Can Cinch I.T. franchisees waive mediation and proceed directly to arbitration?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
- (ii) If the dispute is not resolved pursuant to Subsection 37(a)(i), the parties shall submit the dispute to mediation in accordance with the Commercial Arbitration Rules and Mediation Procedures (Including Procedures for Large, Complex Commercial Disputes) of the American Arbitration Association ("AAA") unless both parties agree to waive mediation and proceed directly to arbitration as set forth in Subsection 37(a)(iii).
Each party will bear their own costs and fees of the mediation, however, the mediator's fee will be split equally between the parties.
- (iii) If the parties have not resolved a claim, controversy or dispute by negotiation, mediation, or otherwise (which the parties will make a diligent effort to do) or if a claim, controversy or dispute arises subsequent to the termination or expiration of this Agreement, such claim, controversy or dispute shall be referred to Arbitration in accordance with the AAA's Commercial Arbitration Rules and Mediation Procedures (Including Procedures for Large, Complex Commercial Disputes), as amended (and specifically including the Optional Rules).
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, franchisees have the option to waive mediation and proceed directly to arbitration if both parties agree. The standard process involves initial negotiation between designated representatives, with at least one meeting or telephone conference within thirty days of the initial dispute notice. If negotiation fails, the parties are expected to submit to mediation under the American Arbitration Association (AAA) rules. However, this mediation step can be bypassed if both Cinch I.T. and the franchisee consent to move directly to arbitration.
If a resolution isn't achieved through negotiation or mediation, or if a dispute arises after the agreement ends, the claim will be referred to arbitration following AAA's Commercial Arbitration Rules and Mediation Procedures. The arbitrator is expected to apply the Federal Rules of Civil Procedure and the Federal Rules of Evidence where possible, while still maintaining a streamlined arbitration process. The laws of the Commonwealth of Massachusetts will be used to interpret the agreement during arbitration.
This waiver option provides flexibility, potentially saving time and costs associated with mediation if both parties believe it would be unproductive. However, it requires mutual agreement, ensuring that neither party is forced into arbitration prematurely. For a prospective Cinch I.T. franchisee, understanding this process is crucial, as it outlines the steps for resolving disputes and the conditions under which mediation can be skipped in favor of arbitration.