Does the Itan franchise agreement require both parties to agree to negotiation or mediation for Excluded Claims?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- 22.1. Negotiation and Mediation. Except as otherwise provided below with respect to Excluded Claims, the parties shall attempt in good faith to resolve any Dispute through informal discussions and negotiations. If these efforts are unsuccessful, either party may submit the Dispute to mediation before a mutually-agreeable mediator prior to litigation. All negotiations and mediation proceedings (including all discovery conducted therein and statements and settlement offers made by either party or the mediator in connection with the mediation): (a) shall be strictly confidential; (b) shall constitute "settlement negotiations" for purposes of federal and state rules of evidence; and (c) shall not be admissible or otherwise used for any purpose in any court or arbitration proceeding (except evidence that would otherwise be discoverable or admissible shall not be excluded from discovery or made inadmissible simply because of its use in mediation). The mediator may not be called as a witness for any purpose in any court proceeding. Any Dispute involving Claims alleging a breach of §14, §17 and/or §21 (referred to as "Excluded Claims") is not subject to mandatory negotiation or mediation unless both parties agree otherwise.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the standard dispute resolution process involves negotiation and mediation. However, this does not apply to "Excluded Claims," which pertain to breaches of specific sections (§14, §17, and/or §21) of the franchise agreement.
For these Excluded Claims, neither mandatory negotiation nor mediation is required unless both Itan and the franchisee mutually agree to it. If the parties do not agree to negotiate or mediate, either party can proceed directly to litigation to resolve the dispute.
This means that for certain critical disputes related to specific breaches, an Itan franchisee might find themselves immediately in court without the opportunity for preliminary negotiation or mediation, unless both parties consent. This could potentially escalate conflict and increase legal costs for both parties involved.