Does the Ella Cafe franchise agreement require mediation for disputes over the validity of the agreement?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
14.1.* Governing Law. Except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sections 1051 et seq.) or other federal law, this Agreement, the franchise, and all claims arising from the relationship between Franchisor and Developer will be governed by and construed in accordance with the laws of the State of Florida, without regard to its conflict of law rules. Franchisor and Developer acknowledge that the agreements regarding applicable law, forum, and venue set forth in this Section 14. provide each of the parties with the mutual benefit of uniform interpretation of this Agreement and any dispute arising out of this Agreement or the relationship created by this Agreement. Franchisor and Developer further acknowledge the receipt and sufficiency of mutual consideration for such benefit.
14.2. Mediation.
14.2.1. The parties acknowledge that during the Term and any extensions of this Agreement certain disputes may arise that the parties are unable to resolve, but that may be resolvable through mediation. To facilitate such resolution, Franchisor, Developer, and each Owner agree to submit to mediation any claim, controversy, or dispute between Franchisor or its Affiliates (and Franchisor's and its Affiliates' respective owners, officers, directors, agents, representatives, and/or employees) and Developer or Developer's Affiliates (and Developer's Owners, agents, representatives, and/or employees) arising out of or related to: (a) this Agreement or any other agreement between Franchisor and Developer; or (c) the validity of this Agreement or any other agreement between Franchisor and Developer, before bringing such claim, controversy or dispute in a court or before any other tribunal.
- 14.2.2. The mediation will be conducted by a mediator agreed upon by Franchisor and Developer. If agreement cannot be reached within 15 days after either party has notified the other of its desire to seek mediation, then mediation will occur with the American Arbitration Association or any successor organization ("AAA") in accordance with its rules governing mediation. Mediation will be held at the offices of the AAA in the city where Franchisor's principal business office is located at the time of the mediation. The costs and expenses of mediation paid to the AAA or to the mediator will be paid equally by the parties. All other mediation-related expenses, including but not limited to, attorneys' fees and travel expenses, will be paid by the party which incurred such expense.
- 14.2.3. If the parties are unable to resolve the claim, controversy, or dispute within 90 days after the mediator has been chosen, then, unless such time period is extended by written agreement of the parties, either party may institute legal proceedings pursuant to Section 14.3. The parties agree that statements made during such mediation proceeding will not be admissible for any purpose in any subsequent legal proceeding.
- 14.2.4. Notwithstanding the foregoing provisions of this Section 14.2., the parties' agreement to mediate will not apply to controversies, disputes, or claims relating to or based on past due amounts owed to Franchisor pursuant to this Agreement, the Marks, Copyrighted Works, or Franchisor's Confidential Information. Moreover, regardless of this mediation agreement, Franchisor and Developer each have the right in a proper case to seek temporary restraining orders and temporary or preliminary injunctive relief in any court of competent jurisdiction.
- 14.2.5. Neither illness, Covid, inconvenience, weather, or any other reason shall serve to excuse your personal appearance for mediation.
- 14.2.5. The parties acknowledge that any information disclosed by either party in mediation may only be used for those purposes and may not be used in any following litigation.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the franchise agreement mandates mediation for certain disputes. Specifically, before bringing a claim to court or another tribunal, both Ella Cafe and the developer (franchisee) must submit to mediation any claim, controversy, or dispute arising out of or related to the validity of the franchise agreement or any other agreement between them. This requirement aims to facilitate resolution outside of formal legal proceedings.
The mediation process involves both parties selecting a mutually agreed-upon mediator. If they cannot agree on a mediator within 15 days of either party expressing a desire for mediation, the mediation will be conducted through the American Arbitration Association (AAA) or its successor, following its mediation rules. The mediation is to be held at the AAA office nearest to Ella Cafe's principal business location.
However, there are exceptions to this mediation requirement. Disputes relating to past due amounts owed to Ella Cafe under the agreement, or those concerning the Marks, Copyrighted Works, or Ella Cafe's Confidential Information, are not subject to mandatory mediation. Additionally, both Ella Cafe and the developer retain the right to seek temporary restraining orders or injunctive relief in court, regardless of the mediation agreement. The costs of mediation are to be split equally between both parties, while other expenses such as attorney's fees are the responsibility of the party incurring them. Mediation must be conducted in person, with no telephonic or electronic appearances permitted except for scheduling or non-material matters.