Does the requirement for non-binding mediation apply to disputes concerning the relationship between Dryer Vent Squad and the franchisee?
Dryer_Vent_Squad Franchise · 2024 FDDAnswer from 2024 FDD Document
(1) Non-Binding Mediation – Franchisee and Franchisor agree that before either party may bring any action, dispute and/or controversy arising from or related to this Agreement and/or the franchise relationship between Franchisor and Franchisee in arbitration, the parties must first mediate the dispute through non-binding mediation. Mediation shall be non-binding and shall be conducted by the American Arbitration Association ("AAA") in accordance with AAA's then current rules for the mediation of commercial disputes. All mediation proceedings shall be conducted in Ocean County, New Jersey or, if a mediator is not available in Ocean County, New Jersey, then at a suitable location selected by the mediator that is located closest to Ocean County, New Jersey. Mediation shall be conducted by one mediator and if Franchisor and Franchise cannot agree on a mediator then the mediator shall be selected by AAA. Mediation shall be conducted within 45 days of AAA's designation and/or acknowledgment of the selected mediator or such longer period as may be agreed to between Franchisor and Franchisee in writing and signed by each respective party. Franchisor and Franchisee shall each be responsible for their own costs associated with mediation and Franchisor and Franchisee shall each be responsible for and shall each pay 50% of the mediator's fee and AAA's mediation fees.
Notwithstanding the preceding paragraph, Franchisor and Franchisee agree this Sub-Article 18.G.(1) and, thereby, the prerequisite requirement of non-binding mediation, shall not, at Franchisor's election, apply to: (a) any claims or disputes related to or concerning a breach of this Agreement by Franchisee that, under the terms of this Agreement, may entitle Franchisor to the award of injunctive relief including, but not limited to, Franchisee's violation or purported violation of Article 6 of this Agreement; and/or (b) claims by either Franchisor or
Source: Item 23 — RECEIPTS (FDD pages 51–207)
What This Means (2024 FDD)
According to the 2024 Dryer Vent Squad Franchise Disclosure Document, before a franchisee or Dryer Vent Squad can initiate arbitration for any dispute related to the franchise agreement or the franchise relationship, they must first attempt non-binding mediation. This mediation is to be conducted through the American Arbitration Association (AAA) following their commercial dispute mediation rules. The location for mediation is Ocean County, New Jersey, or the closest suitable location selected by the mediator if one isn't available in Ocean County. A single mediator will preside, chosen either by mutual agreement or by the AAA. The mediation must occur within 45 days of the mediator's designation, unless both parties agree to a longer period in writing. Both Dryer Vent Squad and the franchisee will cover their own costs, and split the mediator's and AAA's fees equally.
However, there are exceptions to this mediation prerequisite. Dryer Vent Squad can choose to bypass mediation for claims related to a franchisee's breach of the agreement that could entitle Dryer Vent Squad to injunctive relief, including violations of Article 6 of the agreement. Additionally, claims related to the failure to pay fees or other monetary obligations under the agreement by either Dryer Vent Squad or the franchisee are also exempt from the non-binding mediation requirement, at Dryer Vent Squad's election.
This means that while mediation is generally required for disputes, Dryer Vent Squad retains the right to pursue certain legal actions, particularly those involving breaches of contract or non-payment of fees, without first engaging in mediation. This could potentially expedite the resolution of these specific types of disputes, but it also means that franchisees may face legal action from Dryer Vent Squad without the opportunity for mediation in these cases.