How are the costs of arbitration shared between the parties in a dispute with Clear Pest Pros?
Clear_Pest_Pros Franchise · 2025 FDDAnswer from 2025 FDD Document
- Arbitration. At our option, all claims or disputes between us, our shareholders, officers, directors, agents and employees and you, arising out of, or in any way relating to, this Agreement or any other agreement by and between you and us or our affiliates, or any of the parties' respective rights and obligations arising from such agreement, or the operation of the Clear Pest Pros Business which are not first resolved through the internal dispute resolution procedure set forth in Section 15.F.1 above, must be submitted first to binding arbitration in Ann Arbor, Michigan under the auspices of the American Arbitration Association ("AAA"), in accordance with AAA's Commercial Arbitration Rules then in effect, and with a mutually agreeable arbitrator with at least five (5) years of franchise law experience. Each party shall bear its own cost of arbitration and you and we shall share costs imposed by the arbitrator equally. This agreement to arbitrate shall survive any termination or expiration of this Agreement.
Notwithstanding the foregoing, we shall not be required to arbitrate, and may initiate litigation in court, in accordance with the procedure set forth in Section 15.F.4 any controversy, dispute, or claim as set forth in this Section 15.F.3 if such controversy, dispute, or claim concerns an allegation that you have violated (or threaten to violate, or pose an imminent risk of violating):
- a.
Any federally protected intellectual property rights in the Marks, the System, trade secrets, or Confidential Information;
- b.
Any claims pertaining to or arising out of any warranty issue;
Source: Item 22 — CONTRACTS (FDD pages 67–68)
What This Means (2025 FDD)
According to Clear Pest Pros' 2025 Franchise Disclosure Document, in the event of arbitration, each party is responsible for covering their own arbitration costs. However, the costs imposed by the arbitrator will be equally split between Clear Pest Pros and the franchisee.
This means that a franchisee entering into arbitration with Clear Pest Pros will need to budget for their own legal representation, preparation of their case, and any associated expenses. They will also be responsible for half of the arbitrator's fees, which can include hourly charges, administrative fees, and other expenses related to the arbitration process. The location of arbitration is Ann Arbor, Michigan.
It is important to note that Clear Pest Pros has the option to pursue litigation in court instead of arbitration under certain circumstances, specifically if the dispute involves allegations that the franchisee has violated federally protected intellectual property rights, warranty issues, or is threatening to do so. This could potentially shift the cost structure of dispute resolution, as litigation expenses can differ significantly from arbitration costs. Franchisees should carefully consider these factors and consult with legal counsel to understand the potential financial implications of dispute resolution with Clear Pest Pros.