Under the Gokhale Method Franchise Agreement, what happens if mediation does not resolve a dispute?

According to the 2024 Gokhale Method Franchise Disclosure Document, if mediation does not resolve a dispute, the matter will be settled through binding arbitration. This arbitration will be conducted before the American Arbitration Association (AAA) following its Commercial Arbitration Rules. The arbitration will be conducted using a single arbitrator in Palo Alto, California. Each party is responsible for covering their own arbitration costs; however, the arbitrator's fees will be split equally between the parties.

This clause is standard in many franchise agreements, as arbitration offers a quicker and often less expensive alternative to litigation. However, franchisees should be aware that arbitration decisions are typically binding and difficult to appeal. The FDD also notes that prospective franchisees are encouraged to seek independent legal advice regarding the applicability of California and federal laws to provisions restricting venue to a forum outside of California.

It is important to note that mediation is not required for certain claims or disputes, including those involving payment obligations more than 45 days past due, actual or threatened disclosure or misuse of confidential information, ownership, validity, or use of the Marks or ownership of Intellectual Property, and enforcement of covenants set forth in Section 17 of the Franchise Agreement. In these specific cases, Gokhale Method can proceed directly to arbitration or other legal remedies without first engaging in mediation.