Who bears the costs of mediation in a Hck Hot Chicken franchise dispute in California?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
e be delivered together with the FDD.
California Corporations Code Section 31125 requires us to give to you an FDD approved by the California Department of Financial Protection and Innovation before we ask you to consider a material modification of your Franchise Agreement.
The Franchise Agreement and the Supplemental Agreements contain provisions requiring binding arbitration with the costs being awarded to the prevailing party. The arbitration will occur in Franchisor's Choice of Law State. Prospective franchisees are encouraged to consult private legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code Section20040.5, Code
of Civil Procedure Section 1281, and the Federal Arbitration Act) to any provisions of the Franchise Agreement or Supplement
Source: Item 22 — CONTRACTS (FDD pages 54–55)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, the costs of mediation for a franchise dispute in California are shared between the parties. Specifically, each party is responsible for their own costs, while the filing fee and the mediator's fees are split equally. This arrangement applies to the Franchise Agreement and Supplemental Agreements. This clause is important for prospective franchisees in California to understand, as it outlines how mediation costs will be handled should a dispute arise with Hck Hot Chicken.
This cost-sharing arrangement can be seen as a middle-ground approach. In some franchise systems, the franchisee bears all costs, while in others, the franchisor might cover them. By splitting the mediator and filing fees, Hck Hot Chicken ensures that both parties have a financial stake in reaching a resolution through mediation. This can encourage more serious and good-faith participation in the mediation process.
However, it's important to note that the Franchise Agreement also contains provisions requiring binding arbitration with costs awarded to the prevailing party, and that the arbitration will occur in the Franchisor's Choice of Law State. The FDD advises prospective franchisees to seek legal counsel to determine the applicability of California and federal laws to provisions restricting venue to a forum outside of California. Franchisees should be aware of the interplay between the mediation and arbitration clauses, and how these dispute resolution mechanisms could impact their financial obligations and legal rights.