What is the role of the American Arbitration Association (AAA) in dispute resolution for the Gokhale Method franchise?
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.
- 24.3. Arbitration. Except as otherwise provided in this section, all disputes between the parties shall, if not resolved by mediation, be resolved in arbitration before the American Arbitration Association ("AAA") under its Commercial Arbitration Rules. Such arbitration shall take place before a sole arbitrator in Palo Alto, California. The parties shall bear all of their own costs of arbitration; provided, however, the fees of the arbitrator shall be divided equally between the parties. The parties hereto agree that arbitration shall not be required, and the parties may proceed in court, 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; and the Intellectual Property (d) enforcement the covenants set forth in Section 17 of this Agreement.
- 24.4.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, the American Arbitration Association (AAA) plays a central role in dispute resolution between Gokhale Method and its franchisees. Initially, disputes must be submitted to mediation administered by the AAA under its Commercial Mediation Procedures. This means that before either party can pursue arbitration or other legal action, they must attempt to resolve the issue through a mediated settlement process facilitated by the AAA. The mediation will take place at a mutually agreed location, or in Palo Alto, California if the parties cannot agree.
However, mediation is not required for certain types of claims. These exceptions include disputes involving a franchisee's payment obligations that are more than 45 days past due, actual or threatened disclosure or misuse of Gokhale Method's confidential information, issues related to the ownership, validity, or use of the Gokhale Method's trademarks or intellectual property, and enforcement of non-compete covenants outlined in the franchise agreement. In these specific cases, Gokhale Method or the franchisee can bypass mediation and proceed directly to arbitration or other legal remedies.
If mediation does not resolve the dispute, the FDD states that the dispute will be resolved through arbitration before the AAA under its Commercial Arbitration Rules. This arbitration will be conducted by a single arbitrator in Palo Alto, California. The costs of both mediation and arbitration, including the mediator's or arbitrator's fees, are to be divided equally between Gokhale Method and the franchisee, while each party bears their own additional costs.
It is important to note that California law requires Gokhale Method to try to settle disputes in mediation administered by the AAA under its Commercial Mediation Procedures. If not resolved by mediation, the Franchise Agreement requires binding arbitration. The arbitration will occur at Palo Alto, California with the costs being borne by the parties equally.