Where must disputes related to the Fitstop Franchise Agreement be initiated?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
mit this matter to mediation. | | v. Choice of forum | 19.4 | Except as otherwise provided in this Chart, any dispute or claim arising out of or related to the Franchise Agreement must be initiated and brought only in the federal or state court encompassing – or closest to – Los Angeles, California. Both parties irrevocably submit to the jurisdiction of such courts, subject to the IDP and mediation provisions set forth above. | | w. Choice of law | 75 | California law applies without reference to choice of law principles (subject to State law), except that the post-term covenants against competition set forth in the Franchise Agreement that shall be governed by the laws where the Franchised |
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ITEM 18: PUBLIC FIGURES
We do not use any public figure to promote our franchise as of the Issue Date.
ITEM 19: FINANCIAL PERFORMANCE REPRESENTATIONS
The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–47)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, any dispute or claim arising from or related to the Franchise Agreement must be initiated and brought in the federal or state court encompassing or closest to Los Angeles, California. Both parties, Fitstop and the franchisee, irrevocably submit to the jurisdiction of those courts. This is subject to the internal dispute process (IDP) and mediation provisions outlined in the agreement.
Before initiating a lawsuit, Fitstop franchisees must first submit any disputes, claims, or causes of action to Fitstop's management for review and discussions. The franchisee must attempt to resolve these issues internally before pursuing mediation or legal action. Fitstop retains the right to submit unresolved matters to non-binding mediation, which will be conducted at Fitstop's headquarters, following the Commercial Mediation Rules of the American Arbitration Association (AAA). Fitstop has 30 days from receiving written notice of a dispute to decide whether to exercise its right to submit the matter to mediation.
This clause means that a Fitstop franchisee may be required to travel to Los Angeles, California, to resolve legal disputes, which could significantly increase legal costs. While the FDD specifies that California law applies, the post-term covenants against competition are governed by the laws where the franchised business is located. Prospective franchisees should carefully consider the implications of the forum selection and choice of law provisions, especially if they are located far from California, and seek legal counsel to understand their rights and obligations under the Franchise Agreement.