What is the dependency between mediation and arbitration in resolving disputes related to the Hck Hot Chicken franchise?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
18.1 Mediation. Except to the extent precluded by Applicable Law, the parties hereby pledge and agree that prior to filing any arbitration or lawsuit (other than suits described in Section 12.2.3 or to seek provisional remedies, including injunctions and as otherwise described below in Section 18.5), they shall first attempt to resolve any dispute between the parties pursuant to mediation conducted in accordance with the Rules of Practice and Procedure of Judicial Arbitration & Mediation Services, Inc. ("JAMS") unless the parties agree on alternative rules and a mediator within 15 days after either party first gives notice of mediation. Mediation shall be conducted in the JAMS office closest to our principal place of business (currently Sarasota, FL) and shall be conducted and completed within 45 days following the date either party first gives notice of mediation. If the parties fail to fully resolve such dispute through mediation within such 45-day period, either party may initiate arbitration. The fees and expenses of the mediator shall be shared equally by the parties. The mediator shall be disqualified as a witness, expert, or counsel for any party with respect to any suit and any related matter. The entire mediation process shall be confidential and the conduct, statements, promises, offers, views and opinions of the mediator and the parties shall not be discoverable or admissible in any legal proceeding for any purpose except as required by Applicable Law, including required disclosure in Franchisor's franchise disclosure document, and provided, however, that evidence which is otherwise discoverable or admissible shall not be excluded from discovery or admission as a result of its use in the mediation.
- 18.2 Arbitration.
If the parties cannot fully resolve and settle a dispute through mediation as set forth in Section 18.1, all unresolved issues involved in the dispute, including any controversy or claim between Franchisor and Franchisee arising out of or relating to this Agreement or any alleged breach hereof, and any issues pertaining to the arbitrability of such controversy or claim and any claim that this Agreement or any part hereof is invalid, illegal, or otherwise voidable or void, shall be submitted to binding arbitration.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, mediation is a prerequisite to arbitration, with some exceptions. Before initiating arbitration or a lawsuit, unless precluded by law or in cases involving suits described in Section 12.2.3 or seeking provisional remedies like injunctions, both parties must first attempt to resolve any dispute through mediation. This mediation should follow the Rules of Practice and Procedure of Judicial Arbitration & Mediation Services, Inc. ("JAMS"), unless both parties agree to alternative rules and a mediator within 15 days after notice of mediation is given.
The mediation must occur at the JAMS office closest to Hck Hot Chicken's principal place of business, which is currently Sarasota, FL, and it must be completed within 45 days from the date mediation notice is given. If mediation fails to resolve the dispute fully within this period, either party can then proceed to initiate arbitration. The costs associated with the mediator are to be shared equally between Hck Hot Chicken and the franchisee. The mediator is barred from serving as a witness, expert, or counsel for either party in any related suit. The entire mediation process is confidential, and the mediator's and parties' conduct, statements, promises, offers, views, and opinions are not admissible in any legal proceeding, except as required by law or for disclosures in Hck Hot Chicken's franchise disclosure document.
If mediation does not fully resolve the dispute, all unresolved issues, including any controversy or claim arising from the Franchise Agreement, breaches, or the validity of the agreement, must be submitted to binding arbitration. This means that franchisees cannot directly proceed to arbitration or litigation without first engaging in mediation, except in specific circumstances. This requirement aims to encourage dispute resolution through a less formal and potentially more amicable process before resorting to binding arbitration, which can be more costly and time-consuming.