Who bears the costs and expenses of conducting the mediation for a Creative World School dispute?
Creative_World_School Franchise · 2025 FDDAnswer from 2025 FDD Document
- (k) Except as may be provided for to the contrary in the AAA procedures with respect to the costs of transcriptions of the arbitration hearing, all fees and expenses of the arbitration shall be borne by the parties equally. Each party shall bear the expense of its own counsel, experts, witnesses, and preparation and presentation of proofs; provided, however, that the arbitrator shall have the authority, in its discretion, at the conclusion of the proceeding, to award costs and attorneys' fees to the prevailing party.
- (l) Any offer of settlement or compromise by either party, whether made before or during the proceeding, is not admissible in the arbitration.
Source: Item 23 — RECEIPTS (FDD pages 80–247)
What This Means (2025 FDD)
The Creative World School's 2025 Franchise Disclosure Document outlines how arbitration costs are handled. According to the FDD, all fees and expenses associated with the arbitration will be equally shared between the parties involved. This includes costs related to transcriptions of the arbitration hearing, unless the AAA (American Arbitration Association) procedures specify otherwise. Each party is individually responsible for covering their own expenses, such as those for their counsel, experts, witnesses, and the preparation and presentation of their evidence. However, the arbitrator has the discretion to award costs and attorney's fees to the party that prevails in the arbitration.
This arrangement means that a Creative World School franchisee entering into a dispute would need to budget for their own legal representation, expert witnesses, and preparation costs. They would also need to be prepared to cover half of the general arbitration fees. This could potentially involve significant upfront expenses. The possibility of recovering these costs exists if the arbitrator decides to award costs and fees to the prevailing party, but this outcome is not guaranteed.
It is important to note that any settlement offers made during the process are not admissible in the arbitration. This encourages open and honest negotiation without fear that such offers will be used against a party during the arbitration itself. Prospective franchisees should carefully consider the potential costs of arbitration and the conditions under which they might recover those costs when evaluating the franchise agreement.