Does the mediation requirement apply to all disputes between Face Foundrie and the franchisee?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
18.02 Mediation. Except where it is necessary for either Franchisor or Franchisee to obtain equitable relief to preserve the goodwill of their respective businesses (including, but not limited to, the enforcement of obligations upon termination of this Agreement and the covenants not to compete contained in this Agreement), Franchisor and Franchisee each agree to enter into mediation of all disputes involving this Agreement or any other aspect of the relationship between them, for a minimum of four (4) hours, before initiating any legal action or arbitration against the other. Upon written notice by either Franchisee to Franchisor, to the other, of Franchisee or Franchisor's desire to mediate, the party receiving the notice will select an independent entity that provides mediation services to serve as mediator in the proceeding. If the party receiving the notice of intent to mediate does not name such an organization within ten (10) days from the date the notice of intention to mediate is received, then the other party may proceed as if this Section 18.02 did not exist, or, at its option, make the selection of the organization to provide mediation services. If Franchisee or Franchisor selects an organization that is unwilling to serve as mediator, then the other party may select the organization. Once the organization is designated and agrees to accept the appointment as mediator, the organization will be directed to schedule a mediation proceeding at a time mutually convenient to Franchisee and Franchisor. The mediation will be held within thirty (30) days following receipt by the mediation organization of notification that its services are requested. If Franchisee and Franchisor cannot agree on a date for mediation, then the mediation organization will select a date it believes is reasonable for both parties, given all of the claimed conflicts in dates. The person actually mediating the dispute will be required to have at least ten (10) years of experience as either a franchisee or franchisor (or as an officer of such an entity) or in franchise law. Franchisor and Franchisee will equally share the cost of the mediator. The mediator will select the location for the mediation, but unless Franchisor and Franchisee agree otherwise, the mediation will be held in a metropolitan area within twenty (20) miles of Franchisor's principal office.
Except for the matters identified above where Franchisor or Franchisee are permitted to seek injunctive relief without first mediating the dispute, if either party initiates litigation or arbitration without complying with their obligation to mediate in accordance with this paragraph (unless the other party has failed to respond on a timely basis or has indicated it will not engage in mediation in accordance with the provisions of this Section), then upon petition of whichever of the parties has a lawsuit or arbitration proceeding brought against it, the court or arbitrator will dismiss the litigation or arbitration without prejudice, and award reasonable attorneys' fees and costs to the party seeking dismissal in an amount equal to the reasonable attorneys' fees and costs the party seeking dismissal incurred. If the court or arbitrator refuses for any reason to dismiss the action, then regardless of the outcome of the action, or of any award given in the action, the party initiating the litigation
or arbitration will be responsible for all reasonable attorneys' fees and costs incurred throughout the litigation or arbitration by the other party as damages for failing to comply with the provisions of this Section.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, mediation is required for most disputes between Face Foundrie and its franchisees. Specifically, before initiating any legal action or arbitration, both parties must enter into mediation for a minimum of four hours. This applies to all disputes involving the Franchise Agreement or any other aspect of the relationship between Face Foundrie and the franchisee. However, there are exceptions where either Face Foundrie or the franchisee may seek equitable relief to preserve the goodwill of their respective businesses without first going through mediation. This includes the enforcement of obligations upon termination of the agreement and the covenants not to compete.
The mediation process begins with a written notice from one party to the other, indicating a desire to mediate. The receiving party then has ten days to select an independent entity that provides mediation services. If they fail to do so, the other party can either proceed as if the mediation section does not exist or select the mediation organization themselves. The mediator must have at least ten years of experience as either a franchisee, franchisor, or an officer of such an entity, or in franchise law. The costs of the mediator are shared equally between Face Foundrie and the franchisee.
If a party initiates litigation or arbitration without complying with the mediation obligation, the court or arbitrator will dismiss the case without prejudice upon the other party's request. Additionally, the party that failed to mediate will be responsible for all reasonable attorneys' fees and costs incurred by the other party throughout the litigation or arbitration. This provision encourages both parties to engage in mediation to resolve disputes before resorting to more costly and time-consuming legal proceedings. The location for the mediation will be selected by the mediator, but it will generally be held in a metropolitan area within twenty miles of Face Foundrie's principal office, unless both parties agree otherwise.