Are disputes regarding a Craters & Freighters franchisee's payment obligations required to be submitted to mediation?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing, for the sake of clarity, any controversy, dispute, or claim concerning the following will not be required to be submitted to mediation: (i) any federally protected intellectual property rights in the Marks, the System, or in any Trade Secrets, Confidential Information, or other confidential information; (ii) any of the restrictive covenants contained in this Agreement; and (iii) any of Franchisee's payment obligations under this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, disputes regarding a franchisee's payment obligations are specifically excluded from mandatory mediation. The FDD states that any controversy, dispute, or claim concerning a franchisee's payment obligations under the agreement will not be required to be submitted to mediation.
This means that Craters & Freighters franchisees cannot compel the franchisor to enter mediation for payment-related disputes. Craters & Freighters retains the right to pursue other legal avenues, such as litigation, to resolve these issues. This is a deviation from standard franchise industry practices, where mediation is often a first step in dispute resolution.
For a prospective Craters & Freighters franchisee, this clause has significant implications. It means that if a payment dispute arises, the franchisee may face immediate legal action without the opportunity to first attempt to resolve the issue through mediation. Franchisees should carefully consider this when evaluating the franchise agreement and be prepared for the possibility of direct legal action in the event of a payment dispute.