How are disputes resolved under the Face Foundrie Area Development Agreement?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section(s) in Area Development Agreement | Summary | |
|---|---|---|---|
| (u) Dispute resolution by | Sections 16.3 and 16.4 | Except for certain claims, all disputes must be | |
| arbitration or | mediated, and if not settled by mediation, are then | ||
| mediation | subject to arbitration. | ||
| (v) Choice of forum | Section 16.5 | Litigation must be held in the federal or state court for the district where our principal executive office is located (subject to state law). Mediation must occur in a metropolitan area within 20 miles of our principal executive office and arbitration must occur in the office of the American Arbitration Association closest to our principal executive office. | |
| (w) Choice of law | Section 16.1 | Minnesota law applies generally, provided that the Minnesota Franchise Act and other franchise- specific laws and regulations of the State of Minnesota generally do not apply to Facial Bars located outside of Minnesota. (Subject to applicable state law.) |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION OF THE FRANCHISE RELATIONSHIP (FDD pages 51–59)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, dispute resolution under the Area Development Agreement involves mediation and, if necessary, arbitration. Except for certain claims, all disputes must first go through mediation. If mediation is unsuccessful, the disputes are then subject to arbitration. This two-step process is a common approach in franchising, designed to encourage parties to resolve issues amicably before resorting to more formal and costly legal proceedings.
The FDD specifies the location for both mediation and litigation. Mediation must occur in a metropolitan area within 20 miles of Face Foundrie's principal executive office. Arbitration must occur in the office of the American Arbitration Association closest to Face Foundrie's principal executive office. Litigation, if it becomes necessary, must be held in the federal or state court for the district where Face Foundrie's principal executive office is located. These stipulations regarding venue are subject to applicable state law.
The Area Development Agreement is governed by Minnesota law, although the Minnesota Franchise Act and other franchise-specific laws and regulations of the State of Minnesota generally do not apply to Facial Bars located outside of Minnesota. This choice of law can be significant because it determines which state's laws will be used to interpret the agreement and resolve any disputes. Franchisees should be aware of the implications of this choice of law, especially if they are located outside of Minnesota, and may want to seek legal counsel to understand their rights and obligations under the Area Development Agreement.