What dispute resolution method must Gokhale Method parties attempt before arbitration?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
Mediation.
Except as otherwise provided herein, if a dispute arises between the parties, whether relating to this Agreement or not, the parties must first try in good faith to settle the dispute by mediation administered by the American Arbitration Association ("AAA") under its Commercial Mediation Procedures.
Only if a party fails or refuses to acknowledge its obligation to mediate after 15 days' written notice, or after a mediator has certified in writing that, following mediation, the dispute is not resolved, may the parties proceed to arbitration.
The mediation shall take place at a mutually agreed location, or, if the parties cannot agree to a location, in Palo Alto, California.
The parties shall each bear all of their own costs of mediation; provided, however, the fees of the mediator shall be divided equally between the parties.
The parties hereto agree that mediation shall not be required with respect to any claim or dispute involving: (a) any payment obligation of yours that is more than forty five (45) days past due; (b) actual or threatened disclosure or misuse of our Confidential Information; (c) the ownership, validity, or use of the Marks or ownership of Intellectual Property (d) enforcement the covenants set forth in Section 17 of this Agreement.
If a party fails to respond to a written request for mediation within fifteen (15) days after service or fails to participate in any scheduled mediation conference, that party shall be deemed to have waived its right to mediate the issue in dispute.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, mediation is the required dispute resolution method that must be attempted before arbitration. Specifically, if a dispute arises between Gokhale Method and a franchisee, both parties must first try to settle the dispute through mediation administered by the American Arbitration Association (AAA) under its Commercial Mediation Procedures.
This mediation is required before proceeding to arbitration, unless a party fails or refuses to acknowledge its obligation to mediate after 15 days' written notice, or after a mediator certifies in writing that the dispute is not resolved following mediation. The mediation will take place at a mutually agreed location, or in Palo Alto, California, if the parties cannot agree on a location. Each party bears their own costs of mediation, but the mediator's fees are divided equally between the parties.
However, mediation is not required for certain claims or disputes. These exceptions include disputes involving a franchisee's payment obligation that is more than 45 days past due, actual or threatened disclosure or misuse of Gokhale Method's confidential information, issues concerning the ownership, validity, or use of Gokhale Method's Marks or intellectual property, and enforcement of covenants outlined in Section 17 of the Franchise Agreement. If a party fails to respond to a written request for mediation within 15 days or does not participate in any scheduled mediation conference, they waive their right to mediate the issue in dispute.
This clause is fairly standard in franchise agreements, as mediation is often seen as a less costly and more efficient way to resolve disputes compared to arbitration or litigation. Franchisees should be aware of these dispute resolution steps and exceptions, as failure to follow them could impact their legal rights.