What is the obligation of both parties to resolve disputes through mediation with Craters & Freighters?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
n ("AAA"), in accordance with AAA's Commercial Mediation Rules then in effect. Franchisor's rights to mediation, as set forth herein, may be specifically enforced by Franchisor. Each party will bear its own cost of mediation and Franchisor and Franchisee will share mediator fees equally. Each party will use best efforts to resolve the dispute involving the Claim through mediation. The parties hereto will have sixty (60) days to reach a settlement; such sixty (60) day period will begin on the date that Franchisee has submitted such claim to the AAA. 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.
- 23.3 Arbitration. In the event any dispute involving a Claim is not resolved through mediation within the sixty (60) day period referenced in Section 23.2 above, Franchisee must submit such Claim to arbitration in Jefferson County or Denver County, State of Colorado, in accordance with the Commercial Arbitration Rules of the American Arbitration Association and judgment upon the award may be entered in any court having jurisdiction thereof. The arbitration will be held before, and decided by, a panel of three (3) arbitrators. Franchisor will select one (1) arbitrator, Franchisee will select one (1) arbitrator, and those two (2) arbitrators will then select the third arbitrator. If the arbitrators selected by Franchisor and Franchisee cannot agree on the third arbitrator, then all three (3) arbitrators will be selected in accordance with the rules of the American Arbitration Association, which means that the arbitrators selected by Franchisor and Franchisee will not serve as arbitrators for such Claim. The parties hereto expressly consent to personal jurisdiction in the State of Colorado and agree that such court(s) will have exclusive jurisdiction over any determination of the "prevailing party" in accordance with such issues not subject to arbitration.
- 23.3.1 Authority of Arbitrators. The arbitrators will not have any authority to add, delete, or modify in any manner, the terms and provisions of this Agreement. All findings, judgments, and awards will be limited to the dispute set forth in the written demands. All decisions by the arbitrators will be made in writing not later
than ten (10) days after the hearing is complete. Any judgment may be entered in any court of competent jurisdiction; provided, however, the entering of any judgment will not prohibit Franchisor from applying for injunctive relief or other relief to any court having jurisdiction.
- 23.3.2 Attorneys' Fees. The parties to the arbitration proceeding(s) will be solely responsible for their own legal fees and costs. Such parties will be responsible for their share of the arbitration process fees and costs, subject to Section 23.3.4 of this Agreement.
- 23.3.3 No Withholding or Offset.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, both the franchisee and Craters & Freighters are obligated to use their best efforts to resolve disputes through mediation. Both parties are responsible for covering their own mediation costs, and they will split the mediator fees equally. Franchisees must submit claims to the American Arbitration Association (AAA).
The parties have a 60-day period to reach a settlement, starting from the date the franchisee submits the claim to the AAA. However, certain disputes are exempt from mandatory mediation, including those concerning federally protected intellectual property rights in the Marks, the System, or in any Trade Secrets, Confidential Information, or other confidential information, restrictive covenants within the agreement, and the franchisee's payment obligations.
If mediation fails to resolve the dispute within the 60-day period, the franchisee must submit the claim to arbitration in Jefferson County or Denver County, Colorado, following the Commercial Arbitration Rules of the American Arbitration Association. The arbitration will be decided by a panel of three arbitrators, one selected by Craters & Freighters, one by the franchisee, and a third chosen by the first two. If the two arbitrators cannot agree on a third, the American Arbitration Association's rules will govern the selection of all three arbitrators. Both parties consent to personal jurisdiction in Colorado, and Colorado courts will have exclusive jurisdiction over any determination of the "prevailing party" in issues not subject to arbitration.
Both Craters & Freighters and the franchisee retain the right to seek temporary or preliminary injunctive relief from a court of competent jurisdiction in connection with any claim. However, they must simultaneously submit the dispute for mediation and arbitration. Craters & Freighters is entitled to seek such injunctive relief without bond, but upon providing due notice. The franchisee's sole remedy if such injunctive relief is granted is to seek its dissolution, and they expressly waive any claims for damages resulting from the wrongful issuance of the injunction.