Under what rules will arbitration be settled for an Extreme Art Studio franchise dispute?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
iation is sought. The request shall specify with reasonable particularity the matters for which non-binding mediation is sought. Non-binding mediation hereunder shall be conducted by a mediator or mediation program designated by us in writing. We shall make the designation within a reasonable time after issuance of the request.
17.6 ARBITRATION.
- 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.
- 17.6.4 The arbitration award shall be binding upon the parties, and may be entered and enforced in any court of competent jurisdiction. Any arbitration or mediation proceeding shall be limited to controversies between us and you, and shall not be expanded to include any other Extreme Art Studio franchisee as a party, or include the adjudication of class action claims. Except as required by applicable law, including the required disclosure in our franchise disclosure document, the entire arbitration proceedings and related documents are confidential.
17.7 INJUNCTIVE RELIEF AND PROVISIONAL REMEDIES.
17.7.1 Notwithstanding the provisions of Sections 17.5 and 17.6 of this Franchise Agreement, we have the right to seek from an appropriate court any provisional remedies, including declaratory relief, specific performance, temporary restraining orders or preliminary injunctions and we are not required to await the outcome of any mediation or arbitration before seeking such remedies for actions brought with respect to: (i) threatened or actual conduct that will cause us, the Marks, Confidential Information, and/or the System loss or damage; (ii) to prohibit any act or omission by you or your employees that constitutes a violation of any applicable law or is dishonest or misleading to your clients or to the public; (iii) issues concerning the alleged violation of federal or state antitrust laws; (iv) securing injunctive relief or specific performance; (v) the right to indemnification or the manner in which it is exercised; (vi) any action seeking your compliance with post-termination obligations set forth in Section 15; or (vii) any action that involves an alleged breach of any restrictive covenant under Sections 6, 7, or 15.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, any claim or controversy arising from the Franchise Agreement that is not settled by mediation will be settled by arbitration under the then-prevailing Commercial Arbitration Rules of the American Arbitration Association. The arbitrator will have franchise or contract experience and be appointed under such rules on an individual basis. The arbitration will be limited to controversies between the franchisee and Extreme Art Studio, and will not include other Extreme Art Studio franchisees or class action claims. The arbitrator has exclusive authority to resolve disputes relating to the interpretation, applicability, enforceability, or formation of the Franchise Agreement, except for claims excluded from mediation and arbitration under the Franchise Agreement.
Neither party can initiate arbitration before the Mediation Termination Date, and a written demand must be made to the other party to initiate the arbitration proceeding after that date. The demand for arbitration will not stay or postpone any termination of the Franchise Agreement, and arbitration will not proceed until any protest of arbitrability is resolved by the arbitrator. Both Extreme Art Studio and the franchisee waive any right to punitive, treble, or multiple damages, with any award limited to actual damages sustained. The prevailing party can recover expenses, including reasonable attorney and accounting fees, in addition to other relief such as specific performance or injunctive relief.
All arbitration proceedings will take place in the county and state of Extreme Art Studio's principal business address, which is currently in Eden Prairie, Minnesota. The arbitration award is binding and can be entered and enforced in any court of competent jurisdiction. The entire arbitration proceedings and related documents are confidential, except as required by applicable law, including disclosure in the franchise disclosure document. All matters relating to arbitration will be governed by the Federal Arbitration Act.
Despite the arbitration agreement, Extreme Art Studio retains the right to seek provisional remedies, including injunctive relief, from a court without awaiting mediation or arbitration outcomes in certain situations. These situations include actions related to conduct causing loss or damage to Extreme Art Studio, the Marks, Confidential Information, or the System; violations of law or dishonest conduct by the franchisee; issues concerning antitrust laws; securing injunctive relief or specific performance; the right to indemnification; compliance with post-termination obligations; or breaches of restrictive covenants.