Who is responsible for the costs of mediation in a dispute with Expense Reduction Analysts?
Expense_Reduction_Analysts Franchise · 2025 FDDAnswer from 2025 FDD Document
28.2 Mediation
- (1) If the dispute is not resolved in accordance with Section 29.1(3) within three (3) weeks, the Franchisor has the option to refer the matter to a mediator for mediation.
- (2) The mediation must be conducted in Dallas, Texas, under the auspices of the American Arbitration Association ("AAA"), in accordance with AAA's Commercial Mediation Rules then in effect.
- (3) The parties must attend any mediation instituted under this Section and try to resolve the dispute. The parties are equally liable for the costs of mediation unless they otherwise agree. The parties must pay their own costs of attending the mediation.
- (4) You may not commence any action against the Franchisor or its affiliates with respect to any such claim or dispute in any court unless the Franchisor fails to exercise its option to submit such claim or dispute to mediation, or such mediation proceedings have been terminated either: (i) as the result of a written declaration of the mediator(s) that further mediation efforts are not worthwhile; or (ii) as a result of a written declaration by the Franchisor. The Franchisor's rights to mediation, as set forth herein, may be specifically enforced by the Franchisor.
Notwithstanding the foregoing, the parties will not be required to first attempt to mediate a controversy, dispute, or claim through mediation as set forth in this Section 29.2 if such controversy, dispute, or claim concerns an allegation that a party has violated (or threatens to violate, or poses an imminent risk of violating): (a) any federally protected intellectual property rights in the Trademarks, the ERA System, or in any Confidential Information or other confidential information; (b) any of the restrictive covenants contained in this Agreement; and (c) any of Your payment obligations under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 58–215)
What This Means (2025 FDD)
According to Expense Reduction Analysts' 2025 Franchise Disclosure Document, in the event of a dispute requiring mediation, the costs of the mediation itself are to be shared equally between the parties, unless they agree otherwise. This means that both Expense Reduction Analysts and the franchisee will be responsible for 50% of the mediator's fees and administrative costs associated with the mediation process. The mediation will be conducted in Dallas, Texas, under the rules of the American Arbitration Association. Each party, however, is responsible for their own costs associated with attending the mediation, such as travel, accommodation, and legal representation.
This arrangement is fairly standard in franchising, where dispute resolution costs are often shared to encourage good-faith participation in the mediation process. It ensures that neither party is unduly burdened by the costs of initiating mediation. However, it's important to note that this equal division of costs can be altered if both Expense Reduction Analysts and the franchisee come to a different agreement regarding the allocation of these expenses.
It is also important to note that mediation is not required for disputes involving intellectual property rights, restrictive covenants, or payment obligations. In these specific cases, either party can immediately pursue legal action without first attempting mediation. This exception recognizes the urgent nature of these types of disputes and the need for swift resolution.
Prospective Expense Reduction Analysts franchisees should consider these mediation terms carefully, understanding their financial responsibilities should a dispute arise. It would be prudent to discuss with Expense Reduction Analysts what types of situations have led to mediation in the past and what the typical costs have been, to better prepare for potential future expenses.