Under what circumstances related to mediation can arbitration be initiated for an Extreme Art Studio franchise?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
- 17.6.1 Except as otherwise provided in this Franchise Agreement any claim or controversy arising out of or related to this Franchise Agreement, or the making, performance, breach, interpretation or termination thereof, that is not settled by mediation under Section 17.5 shall be finally settled by arbitration under the then-prevailing Commercial Arbitration Rules of the American Arbitration Association or any successor thereto, by one arbitrator having franchise or contract experience and appointed under such rules on an individual basis.
Any arbitration proceeding shall be limited to controversies between you and us and shall not be expanded to include any other Extreme Art franchisee as a party or include the adjudication of class action claims.
Except for claims excluded from mediation and arbitration under this Franchise Agreement, the arbitrator, and not any federal, state or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability and enforceability or formation of this Franchise Agreement.
- 17.6.2 Neither party may initiate arbitration prior to the Mediation Termination Date, whether or not the mediation has commenced.
Following the Mediation Termination Date, either party may initiate the arbitration proceeding by making a written demand to the other and both parties will then be obligated to engage in arbitration.
A demand for arbitration will not operate to stay, postpone or rescind the effectiveness of any termination of this Franchise Agreement.
Arbitration will not proceed until any protest of arbitrability is resolved by the arbitrator.
- 17.6.3 We and you waive, to the fullest extent permitted by law, any right or claim to any punitive, treble or multiple damages against the other, and agree that any award shall be limited to the recovery of any actual damages sustained by them.
The prevailing party also shall be entitled to recover its expenses, including reasonable attorney fees and accounting fees, in addition to any other relief to which it is found entitled, including specific performance, injunctive, or declaratory relief under this Franchise Agreement.
All arbitration proceedings shall take place in the county and state of our principal business address, which is currently in Eden Prairie, Minnesota.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, arbitration can be initiated if mediation does not resolve a claim or controversy. Specifically, any claim arising from the Franchise Agreement that is not settled by mediation under Section 17.5 will be settled by arbitration.
However, neither party can start arbitration before the Mediation Termination Date, regardless of whether mediation has started. After the Mediation Termination Date, either party can start arbitration by sending a written demand to the other party, which then obligates both parties to participate in arbitration.
It's important to note that a demand for arbitration does not delay or cancel any termination of the Franchise Agreement, and arbitration will not proceed until any challenges to arbitrability are resolved by the arbitrator. All arbitration proceedings will occur in Eden Prairie, Minnesota.